By Fast Brokers – Gold has regained its luster as a safe haven, casting aside its negative dollar correlation and rushing higher as the Euro and Pound dive. The S&P’s downgrades of Greek and Portugal debt really rocked the markets yesterday, sending the VIX, dollar and yen higher as investors headed for the exits. Meanwhile, attention turns to the Fed and investors will be looking to see whether the central bank alters its timeline for loose policy due to the recent upturn in U.S. economic fundamentals. However, since the Fed is likely to keep its policy unchanged due to high U.S. unemployment, new developments in fiscally troubled EU nations and in UK parliamentary elections will likely have the largest impact on gold over the near-term. Should EU bond yields continue to rise, this could boost the precious metal higher due to risk averse flows. Additionally, the closer the UK gets to a hung parliament the more uncertainty investor uncertainty will increase, a negative for the Pound and possibly a positive for gold.
Technically speaking, gold burst through previous April highs yesterday, certainly a positive development for the precious metal in terms of momentum. That being said, gold is beginning to square its sights on the highly psychological $1200/oz level and previous all-time highs. As for the downside, gold has multiple uptrend lines serving as technical cushions along with intraday and 4/27 lows. Additionally, the psychological $1160/oz and $1150/oz areas could serve as solid cushions should they be tested.
Present Price: $1167.78/ oz
Resistances: $1168.59/oz, $1170.23/oz, $1172.43/oz, $1174.22/oz, $1176.48/oz, $1178.77/oz
Supports: $1165.17/oz, $1163.59/oz, $1161.37/oz, $1159.47/oz, $1157.26/oz, $1154.73/oz
Psychological: $1170/oz, $1160/oz, $1150/oz, April highs and lows
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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