INTERMEDIATE TERM TREND NEUTRAL
SHORT TERM TREND BEARISH
VERY SHORT TERM TREND NEUTRAL
Gold remains stuck within a wide 70 point trading range between 1232 and 1162, with a series of lower highs and lower lows evident on the daily chart as gold grinds lower. This price action sees gold in a holding pattern with a bearish bias, suggesting there is little appetite for gold at present.
The risks are greater to the downside than the upside, with a sharp sell off more likely than a strong rally. A break below 1130 would see gold fall sharply towards 1000 – this remains our favoured outcome and although it has been a long time coming, the recent price action does nothing to give us confidence that gold can break out higher.
The FOMC meeting today could ignite gold, with any hints of an imminent interest rate hike very bearish indeed for gold and bullish for the dollar.
As we have been saying for many years now, as long as equities remain well supported and continue to attract investment funds, gold will tread water at best. There is no prospect of a significant rally in gold whilst equities remain the asset class of choice – counterintuitively, once the interest rate raising cycle begins, gold may eventually benefit as equities sell off and become less attractive to investors.
Recently, equities have been correcting sharply due to the uncertainty surrounding Greece, however this weakness is expected to be short-lived and a resolution to the Greek situation will see a sharp relief rally in stock markets. Oil is steadily moving higher after the sharp plunge to $44 a barrel and is now trading above $60 a barrel.
Support can be found at 1176, 1172, 1162, 1142-1145, 1131, 1124, 1100, 1085, 1045, 1000, 950, 867 and 806. A break of 1131 would be very bearish for gold and suggest a return to 1000-1050 in the first instance.
Resistance can be found at 1184, 1191-1192, 1196-1197, 1204, 1208-1210, 1215, 1220-1223, 1252-1256, 1274, 1285, 1297 and 1305-1308. After a promising move higher following the break of 1180 last year, gold has failed to break the intermediate down trend and is now heading lower again, with the 2014 lows in sight.
Today's video for subscribers looks at the recent trading in more detail and our strategy for today's trading session.