By Fast Brokers – Gold bounced on Monday following Friday’s hefty sell-off in reaction to encouraging U.S. employment data. Friday’s data made investors snap up the Dollar in speculation that the Fed may raise interested rates sooner than anticipated, resulting in a selloff in gold due to the precious metal’s negative correlation to the Dollar. However, Bernanke attempted to quell speculation yesterday by stating that the U.S. economy still faces headwinds, implying the Fed is not likely to raise rates in the foreseeable future barring very positive data confirmations over the near term. That being said, Bernanke’s comments helped gold recover some of Friday’s losses.
Unfortunately for gold bulls, the Dollar is appreciating again after Moody’s warned that the U.S. and UK could test the patience of their resepective Aaa ratings. Additionally, more uncertainty concerning Dubai’s debt issue arose today. As a result, investors are favoring risk-averse investment vehicles , boosting the Dollar and sending gold back below its psychological $1150/oz level. On a positive note, gold remains above Friday lows, indicating near-term supports remain intact for EUR/USD and AUD/USD. Hence, investors should keep an eye on these currency pairs should they interact with key supports because another wave of Dollar strength could knock gold back towards its psychological $1100/oz level.
Technicaly speaking, gold has multiple uptrend lines serving as technical cushions along with 12/07, 11/19, and 11/12 lows. Furthermore, $1100/oz could prove to be a strong psychological support should it be tested. As for the topside, we’re still not able to confidently place a downtrend line due to the lack of hisorical perspective. However, gold does face technical obsticales in the form of intraday, 11/23, and 11/26 highs along with the psychological $1175/oz and $1200/oz levels.
Present Price: $1145.75/oz
Resistances: $1149.18/oz, $1153.67/oz, $1161.84/oz, $1165.11/oz, $170.01/oz, $1173.69/oz
Supports: $1143.46/oz, $1138.56/oz, $1134.47/oz, $1129.98/oz, $1126.71/oz, $1123.03/oz
Psychological: $1150/oz, $1175/oz, $1100/oz, $1200/oz
Market Commentary provided by Fast Brokers.
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