By Fast Brokers – Gold has undergone a steady decline this week after setting fresh all-time highs. The precious metal was unable to leave behind $1250/oz for the 2nd time in the past month and has since sunk back towards its psychological $1215/oz level after investors dipped back into the risk trade. The EU news wires have been relatively quiet this week following last week’s worries concerning Hungary’s fiscal condition. The break in news has allowed investors to hone in on fundamentals and return to risk since yesterday’s Asia data surprised to the topside. However, this week’s decline in gold has been structured and gold maintains several layers of uptrend lines, meaning the precious metal’s uptrend is still healthy. Both the Cable and Aussie have logged solid gains over the past two trading sessions while the EUR/USD creeps higher from May lows. Meanwhile, investors are waiting for U.S. retail sales and consumer sentiment data, which should lead this week’s final trading session. Additionally, although news from the EU has died down, investors should still keep an eye on the EU news wires since the potential for another negative development remains regardless of this week’s serenity. Meanwhile, even though gold has exhibited a negative correlation with the risk trade this week, it wouldn’t be surprising if gold’s negative correlation with the dollar came back into play should the risk trade post a medium-term rebound. Therefore, gold’s medium-term outlook could be positive as the precious metal benefits from a win-win position.
Technically speaking, gold faces technical barriers in the form of 6/10 and 6/8 highs. Additionally, the psychological $1250/oz level should continue to 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 6/10 and 6/4 lows. Furthermore, the psychological $1200/oz should serve as a solid technical support should it be tested. Meanwhile, gold is running low on topside technical barriers, normally a positive sign for the near-term.
Present Price: $1220.00/ oz
Resistances: $1222.09/oz, $1225.20/oz, $1227.63/oz, $1229.56/oz, $1232.22/oz
Supports: $1219.16/oz, $1215.42/oz, $1212.52/oz, $1210.36/oz, $1208.18/oz, $1204.80/oz
Psychological: $1200/oz, $1250/oz
(click chart to enlarge)
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