Jul
29
2010

 

Gold Bounces Towards $1170/oz

Gold has bounced back towards $1170/oz as investors divest from the dollar in reaction to dovish comments from the Fed.  The Fed’s Bullard stated that the central bank should continue further QE if there’s another negative shock in the global economy.  Such dovish comments from a Fed official heightens investor uncertainty a bit and makes gold a better buy than the dollar.  However, investors should keep in mind that our key medium-term uptrend lines gave way on Wednesday.  Our medium-term uptrend lines run through March and February lows, meaning if gold can’t climb back above $1185/oz soon the precious metal could enter a more prolonged downturn below $1100/oz.  That being said, it will be interesting to see how gold reacts to tomorrow’s economic data since we could be in for an active trading session.  The U.S. is releasing prelim GDP, revised consumer sentiment, and the Chicago PMI.  If tomorrow’s data prove beneficial for the risk trade then we could witness another step lower in gold.    

            
Technically speaking, gold has technical supports in the form of 7/28 and 4/27 lows.  Additionally, the psychological $1150/oz level could serve as a near-term technical cushion should it be tested.  As for the topside, gold is accumulating new downtrend lines and faces technical barriers in the form of intraday highs.
Present Price: $1168.53/ oz
Resistances:  $1169.30/oz, $1171.19/oz, $1173.63/oz, $1175.79/oz, $1177.95/oz, $1180.66/oz
Supports:  $1166.20/oz, $1164.57/oz, $1161.77/oz, $1159.69/oz, $1158.07/oz, $1155.53/oz
Psychological: $1150/oz, July highs and May lows
 
 
 

 
Posted by: Matthew Myers

 

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