INTERMEDIATE TERM TREND BEARISH
SHORT TERM TREND BEARISH
VERY SHORT TERM TREND BEARISH
In our last update, we said we were watching support at 1850 as the key area and that a break of this support was likely to see a sharp sell off towards our target of 1780-1790. This level coincides with the 200 day Moving Average, and is also previous resistance from early summer 2020, meaning it is now an area of strong support.
Since then, gold broke decisively through support at 1850 at the bottom boundary of the triangle consolidation pattern that has been in place since August and sold off sharply to test the 200 day Moving Average as we predicted. We suspect this level will hold, though there is likely to be another test before the price starts to move higher into December.
Gold is now trading well below the 50 day Moving Average, currently at 1889, and the 89 day Moving Average, currently at 1920. These levels provide resistance in the short term. The price remains just above the 200 day Moving Average which is currently at 1795.
Equities continue to surge 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.
Since jumping initially on the vaccine news, equities have pulled back a little but remain within striking distance of all time highs, particularly as further good news on vaccines is now emerging on a regular basis.
The Dow is currently at 29,886, just a few hundred points below the all time high of 30,214, and the S&P 500 is currently at 3,630, just 40 points below the all time high of 3,674 set on 9 November.
Oil prices have recovered strongly since testing $34 at the start of November and are now trading above $45 a barrel for the first time since March. The chart still looks very bullish and we expect oil prices to rally further over the coming months. Our initial target is $50 in the short term.
In gold, support can be found at 1797, 1775, 1765 and 1700. In the medium term, we still expect further gains in the gold price would suggest a move towards 2,100 early next year is likely.
Short term resistance can be found at 1818, 1830, 1850, 1889, 1900, 1920, 1965, 2000, 2016 and 2077. Gold needs to break the key resistance level around 1965 to give the bulls some renewed momentum and a move back towards the all time highs above 2000.