INTERMEDIATE TERM TREND BULLISH
SHORT TERM TREND BEARISH
VERY SHORT TERM TREND BULLISH
In our last update, we noted that the dramatic sell off from just above 1900 had stalled in recent days but prices remain subdued near the lows and the bounce had to date been extremely weak. The price was below all of the major Moving Averages and looked in danger of selling off further towards 1700.
Since that update, gold has managed to stabilise above the 1750 level that was hit at the end of June, with any renewed attempts at selling action seeing buyers step in. For several weeks, the price bounced around in a narrow range, unable to break above 1800 resistance but well supported above 1750. Slowly but surely, the bulls forced the price higher and after breaking through resistance at 1800 and further resistance at 1808-1810, the rally started to accelerate, culminating in a break of the important August downtrend line yesterday.
Gold has found resistance at the 55 day Moving Average at 1833 this morning and is currently in the process of back testing the breakout of the August downtrend at around 1817. The bulls must defend this breakout line, as a failure to hold this level will be seen as a failed breakout attempt that will encourage further selling and a move back towards 1800 in the first instance.
The gold price is now back above the 89 day Moving Average at 1800. This level will provide support, with the 55 day Moving Average at 1833 now providing short term resistance. The 233 day Moving Average just above this level at 1839 is further strong resistance, in the short term gold needs to take out these two Moving Averages and hold 1800 to keep the bulls in the driving seat. A weekly close above 1817 will be the bull’s minimum objective this week.
Equities continue to grind higher, fuelled by unprecedented amounts of financial stimulus and liquidity and record low interest rates and continue to make all-time highs on a regular basis.
After a pullback this month that found support at the 89 day Moving Average, the Dow is currently at 34900, just 100 points below the all time high of 35092 set in in May, whilst the S&P 500 continues to make all time highs on an almost daily basis. The index is currently at 4368, just a few points below the all-time high of 4393 achieved yesterday.
Oil prices pulled back to $57 after making new multi year highs around $68 a barrel at the start of March, though have now resumed their rally and are well above $70 a barrel. Our current target for oil is $80, however recent price weakness suggests a correction may be underway before the rally resumes.
In gold, support can be found at 1817, 1810-1808, 1800, 1790, 1760, 1725, 1695-1705, 1675-1680, 1650 and 1610. In the medium term, we still expect further gains in the gold price and would suggest a move towards 2350 in the final quarter of this year remains possible.
Short term resistance can be found at 1833, 1839, 1845-1850, 1870, 1900-1910, 1925, 1960 and 2000. Gold needs to regain the key level at 1840-1850 to give the bulls the power to move back towards the all-time highs above 2000.