INTERMEDIATE TERM TREND NEUTRAL
SHORT TERM TREND NEUTRAL
VERY SHORT TERM TREND BEARISH
In our last update, we noted that the gold price was attempting to stabilise above the key 200 day Moving Average and trying to move higher from this level of support and a tentative uptrend channel had been formed on a very short term time frame.
We also noted that the bounce in the dollar would need to be watched carefully, as further strength could cap any rallies. It was also noted that a decisive break of this key support level will likely see a return to the 1770 region and potentially a test of the bottom of the downtrend channel at 1700.
Since then, gold has retested the 200 day Moving Average and bounced again, though the gains have been restricted due to a resurgent dollar and continuing equity market strength. The high over the period has been 1875, tested twice and also coinciding with the 89 day Moving Average.
In summary, gold has been stuck in a range with the 89 day Moving Average at the top and the 200 day moving Average at the bottom. A break out of this range would suggest a large move in the direction of the break.
The 89 day Moving Average is now at 1873 and the 50 day Moving Average at 1856. The 200 day Moving Average at 1820 is now the key support level that must hold 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. As good news on vaccine development continues to arise on a regular basis, equities have pulled back a little but remain within striking distance of all-time highs.
After a shallow pullback in the last week or so, the Dow is currently at 30737 and within striking distance of the all time high of 31259 set a month ago and the S&P 500 is currently at 3830, just below the all-time high of 3831 achieved last month.
Oil prices have recovered strongly since testing $34 at the start of November and are now trading at $55 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 target of $55 has been hit and we are now targeting $60.
In gold, support can be found at 1832, 1820, 1800, 1765, 1750 and 1700. In the medium term, we still expect further gains in the gold price would suggest a move towards 2,100 early this year is likely.