By Fast Brokers – Gold is shooting higher again after rallying from $1100/oz on Friday. Today’s positive performance stems from a strong EUR/USD and GBP/USD. However, the real gold movers are the AUD/USD and S&P futures, which are both headed for new 2009 highs. Therefore, it seems the risk trade is finally taking a cue from gold’s incredible rally as of late. Now it seems gold’s positive correlations are leading the way, sending the precious metal beyond $1130/oz. The S&P’s charge past its highly psychological 1100 level could prove to be a key move for the risk trade since the S&P futures have buckled under the pressure of 1100 for the past month. Such a movement would likely serve as a positive catalyst for gold since stronger equities have been resulting in a weaker Dollar. Since gold is also negatively correlated to the Dollar, the precious metal may be in for further near-term gains. Hence, investors should keep an eye on the EUR/USD and its interaction with 1.50 and previous November/October highs (refer to EUR/USD commentary). Any key topside breakout in the EUR/USD could serve as another positive indicator for gold. Meanwhile, the U.S. will release some important pricing data tomorrow. Therefore, the markets could remain in a volatile state for the next 24-48 hours.
Technically speaking, we’re still unable to install a downtrend line on our chart due to a lack of historical perspective. Therefore, it’s difficult to find any topside technical barriers besides gold’s potentially psychological $1150/oz level. As for the downside, gold has multiple uptrend lines serving as technical cushions along with intraday lows and the psychological $1100/oz level.
Present Price: $1130.45/oz
Resistances: $1131.19/oz $1133.16/oz
Supports: $1127.24/oz, $1124.42/oz, $11122.54/oz, $1117.87/oz, $1114.39/oz, $1110.59/oz
Psychological: $1100/oz., $1150/oz.
Market Commentary provided by Fast Brokers.
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