By Fast Brokers – Gold is topping out below $1150/oz after a solid run despite recent weakness in the EUR/USD and GBP/USD. However, it seems gold’s usual negative correlation with the Dollar is coming back into play today. Gold is edging lower as we witness broad-based strength in the Greenback in reaction to a monetary tightening in China combined with weak data from the EU. Meanwhile, attention remains focused on tomorrow’s U.S. data set. The U.S. will release its headline Unemployment Rate and Employment Change figures. Seeing as a turnaround in U.S. employment triggered December’s Dollar rally, tomorrow’s employment data could stir up volatility in the FX markets should the numbers deviate from analyst expectations. Stronger than expected U.S employment data could encourage investors to snap up the Dollar again, normally a negative catalyst for the gold. On the other hand, discouraging employment numbers could yield broad-based weakness in the Dollar, a negative development for gold. Therefore, investors should keep an eye on the Dollar’s reaction to tomorrow’s economic data releases.
Technically speaking, gold has multiple uptrend lines serving as technical cushions along with 1/05, 12/30, and 12/22 lows. On an encouraging note, gold has set consecutive higher lows after bottoming out in December, and we are currently unable to form a noteworthy downtrend line. Therefore, gold could have some decent upward mobility should the Dollar weaken in reaction to upcoming U.S. data. Meanwhile, our 1st tier uptrend line could prove to be an important trend line since it runs through 10/28 lows, or the $1025/oz level. As for the topside, gold faces technical barriers in the form of 12/17 and 11/18 highs along with the psychological $1150/oz level.
Present Price: $1130.25/oz
Resistances: $1132.99/oz, $1137.41/oz, $1141.33/oz, $1145.40/oz, $1149.29/oz, $1153.17/oz
Supports: $1128.09/oz, $1124.03/oz, $1119.82/oz, $1115.29/oz, $1110.43/oz, $1105.57/oz
Psychological: $1100/oz, $1150/oz, December highs and January lows
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