By Fast Brokers – Gold is gravitating higher, extending its solid rally from 5/21 lows and eclipsing its highly psychological $1200/oz level once again. Strength in gold comes despite yesterday’s late bounce in the risk trading, showing that the precious metal is willing to flex its negative correlation with the dollar despite its status as a safe haven. Speaking of safety, even though the Cable and EUR/USD managed to rally before hitting their previous May lows, the major dollar pairs are still under considerable pressure since uncertainty regarding the EU hasn’t changed. Therefore, despite the calm, investors should keep an active eye on the news wire for another game-changing negative or positive development in the EU seems imminent. However, gold’s correlation with the greenback is a bit unreliable at the moment, so investors should focus more on technical than correlative forces for the near-term. The U.S. will highlight the data wire with DGO data followed by new home sales. Considering how fragile situations are investors should be prepared for a spike in volatility.
Technically speaking, gold faces technical barriers in the form of 5/7 and 5/18 highs. Additionally, the psychological $1250/oz level should serve as a solid technical barrier should it be reached. As for the downside, gold has multiple uptrend lines serving as technical cushions along with 5/25 and 5/21 lows. Furthermore, the psychological $1200/oz area now becomes a technical cushion.
Present Price: $1203.60/ oz
Resistances: $1205.26/oz, $1208.07/oz, $1211.57/oz, $1215.69/oz, $1219.16/oz
Supports: $1202.59/oz, $1199.91/oz, $1197.08/oz, $1194.24/oz, $1190.92/oz.
Psychological: $1200/oz, $1250/oz
(click chart to enlarge)
Market Commentary provided by Fast Brokers.
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