Gold surged higher yesterday afternoon on the back of a weak ADP jobs report though found resistance at the 1322 level for the second day in a row - this area is now important resistance, with the market making repeated failed attempts to break 1320 last night and this morning.
US equities and the dollar sold off sharply yesterday which also benefited gold, however the response was rather muted considering the prevailing conditions that should see gold moving sharply higher. This suggests to us that once the US equity markets and dollar recover, gold will fall sharply.
A test of 1272-1277 looks likely, particularly if the US government problems are resolved - a break of this key support level will likely see a swift return to 1180 as a minimum, with the possibility of much lower prices. Support comes in at 1307, 1300-1302 and 1292 before this.
The key resistance level is 1320-1322, with 1338-1342, 1353, 1375, 1400 and 1434 above this. A break of 1434 will suggest a return to 1500 and potentially much higher prices.
Today's video for subscribers looks at the recent trading in more detail and our strategy for our current trade.