By Fast Brokers – Gold has bounced back to $1240/oz after undergoing a swift sell-off yesterday as the risk trade pulled back across the board. However, the weakness in gold likely stemmed from overbought conditions as the precious metal remains locked within its steady uptrend. It will be interesting to see how much lost ground gold can make up over the near-term or whether another bout of selling ensues. So far gold is exhibiting a healthy technical rise and there’s presently no reason to panic from yesterday’s downturn. Meanwhile, investors are digesting austerity measures from the UK and Japan and we will have to see how the risk trade fares over the next 24-48 hours. We have key data from the EU coming across the board tomorrow along with the BoE’s meeting minutes and a Fed monetary policy decision. Should either event deal a negative psychological blow to the risk trade this may benefit gold due to its safe haven status. On the other hand, if the risk trade steps back into its uptrend then gold should also follow suit due to the precious metal’s negative correlation with the greenback.
Technically speaking, gold faces technical barriers in the form of intraday and 6/21 highs. Additionally, the $1250/oz level becomes a psychological hindrance once more. As for the downside, gold has multiple uptrend lines serving as technical cushions along with 6/21, 6/16, and 6/7 lows.
Present Price: $1240.08/ oz
Resistances: $1241.91/oz, $1244.40/oz, $1248/oz, $1251.55/oz, $2155.12/oz, $1260.06/oz
Supports: $1237.38/oz, $1235.75/oz, $1233.98/oz, $1231.35/oz, $1229.56/oz, $1227.63/oz
Psychological: $1250/oz, June highs
(click chart to enlarge)
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