By Fast Brokers
Gold retested our 2nd tier downtrend line yesterday, yet failed to close above on our 4-hour chart. The precious metal has since pulled back, finding comfort in our 2nd tier downtrend line once more. Gold seems to be settling into a consolidation pattern with the critical $1000/oz level just out of reach. Volume is declining gradually, and it appears investors seek a follow through from either U.S. equities or another strong leg of depreciation in the U.S. Dollar before the precious metal overcomes its own obstacles. The fact that gold is finding strength in our 1st tier downtrend line is encouraging for bulls. However, the inability of the precious metal to climb above 2nd tier is a little disconcerting. Furthermore, until our 3rd tier downtrend line is breached, the possibility remains that gold could duck back into its medium-term downtrend line. We will just have to wait and see how the present pullback plays out and whether fundamentals are compromised to the downside.
Encouragingly, this attempt to beat $1000/oz seems more promising than gold’s last try in February. Both the GBP/USD and EUR/USD made fundamental bull statements a while back, and the global economic recovery is gaining steam. Furthermore, crude has been on a tear as investors worry about future inflation. Gold has traditionally served as a reliable inflationary hedge. Therefore, we maintain our bullish outlook trend-wise unless the precious metal should make a fundamentally significant move to the downside.
Fundamentally we find resistances of $978.11/oz, $980.56/oz, $983.25/oz, $985.33/oz and $987.29/oz. To the downside, we see supports of $975.81/oz, $972.34/oz, $970.35/oz, $967.81/oz, and $964.89/oz. Gold is currently trading at $977.30/oz.
Market Commentary provided by Fast Brokers.
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