INTERMEDIATE TERM TREND BEARISH
SHORT TERM TREND BEARISH
VERY SHORT TERM TREND BEARISH
In our last update, we noted that gold was poised to test the upper boundary of the trading range and the 89 day Moving Average at 1868. This level was rejected and gold has sold off sharply ever since, falling over $200 in a dramatic and relentless sell off lasting an entire month.
We expected gold to find support around 1690, with a “last chance saloon” support level at 1675 a critical number for the bulls to hold. A break of 1675 would suggest a further sharp decline to 1600 and possibly even lower, however the bulls are attempting to rally from the lows of 1677 made yesterday and the price is currently just above 1700.
A break above 1720 would likely attract further buying interest and a move towards 1770 would be the next target. If the bulls can take the price above 1770, then the correction that has seen the gold price fall by 20% since August 2020 could be at an end.
The 89 day Moving Average is now at 1838, with the 50 day Moving Average at 1826. The 200 day Moving Average at 1838 is the key support level that must be recaptured to keep the bull case alive.
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 shallow pullbacks at the end of January and February, the Dow is currently at 31976 after making a new all time high yesterday and the S&P 500 is currently at 3858, some 100 points below the all-time high of 3964 achieved last month. This divergence between the Dow and the broader S&P 500 is interesting to note, though at this stage does not mean anything more significant.
Oil prices continue to recover strongly since testing $34 at the start of November and are now trading well above $65 a barrel for the first time since April 2019. The chart still looks bullish, though overextended in the short term. We expect a correction in oil before prices rally further over the coming months. Our target of $60 has not just been hit but obliterated and we are now targeting $80 in oil.
In gold, support can be found at 1675, 1650, 1600, 1560, 1500 and 1455. In the medium term, we still expect further gains in the gold price and would suggest a move towards 2,150 later this year remains likely.
Short term resistance can be found at 1711, 1722, 1740, 1760-1770, 1828-1838, 1900, 1960, 2000, 2020 and 2080. Gold needs to break the key resistance level around 1960 to give the bulls the power to move back towards the all-time highs above 2000.