By Fast Brokers – Gold is bouncing back towards $1190/oz after hitting bottom just above $1160/oz on Friday. Despite gold’s rapid decline from $1250/oz, the precious metal still has solid technical supports in place in the form of monthly lows and the psychological $1150/oz level. Due to the extent of gold’s recent rise it is not surprising that the precious metal has undergone a wave of profit taking. Gold’s decline also accelerated last week as the major dollar pairs bounced from their lows. However, the precious metal is moving in lockstep with the risk trade today and should the pullback in the dollar pick up speed gold may continue its climb back towards $1200/oz. Investors should remember that despite gold’s status as a safe haven investment vehicle, the precious metal also tends to exhibit a negative correlation with the greenback. Hence, gold’s upward trajectory is still intact, particularly if uncertainty persists in the EU over the medium-term.
Technically speaking, gold faces technical barriers in the form of intraday and 5/20 highs. Additionally, the psychological $1200/oz level should serve as a solid technical barrier should it be reached. As for the downside, gold still has multiple uptrend lines serving as technical cushions along with 5/21 and 5/5 lows. Furthermore, the $1150/oz level should serve as a strong technical cushion should it be tested.
Present Price: $1187.08/ oz
Resistances: $1187.26/oz, $1191.33/oz, $1195.20/oz, $1199.30/oz, $1202.59/oz
Supports: $1178.97/oz, $1174.76/oz, $1171.60/oz, $1168.80/oz, $1163.89/oz.
Psychological: $1200/oz, $1150/oz
(click chart to enlarge)
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