By Fast Brokers – Gold continues its recovery from our 2nd tier uptrend line and the psychological $950/oz level as it rises with the depreciation of the greenback. Volume is perking up slightly, a positive sign technically. However, volume is still weak as compared to last week’s pullback, meaning we could be in store for more downward pressure once the present bounce tops out. The precious metal is encountering our 3rd tier uptrend line and $963.45/oz resistance. If gold can climb past these barriers, we could witness a near-term pop towards our 2nd tier downtrend line.
Meanwhile, investors should keep an eye on the behavior of the GBP/USD, EUR/USD, and S&P futures. Gold’s positive correlation with both the GBP/USD and EUR/USD seems intact, while these currency pairs may follow U.S. equities this week due to the relatively light presence of economic data. Even though today’s pop is encouraging, we maintain our negative near-term outlook on gold due to the recent, overwhelming volume to the downside. If the precious metal does experience more downward pressure, our 2nd tier uptrend line and 5/26 lows should prove to be key defenses against accelerated movements to the downside.
Fundamentally we find resistances of $960.47/oz, $963.45/oz, $965.98/oz, $968.77/oz, and $972.32/oz. To the downside, we see supports of $957.11/oz, $954.32/oz, $951.79/oz, $946.47/oz, and $943.68/oz. Gold is currently trading at $959.90/oz.
Market Commentary provided by Fast Brokers.
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