Gold is now also trading above the 200 DMA, coming in at 1296 and is closing in on the 50 DMA, the next target for the bulls.
We consider the recent retracement to be a Wave 2 correction with Wave 3 up next - this rally should take gold well above 1400. However, for this to be the case, we need to see equities form a top and sell off sharply and substatially, preferably alongside renewed dollar weakness.
Support can be found at 1298-1300, 1277-1280, 1250-1255, 1237-1240, 1220-1225, 1210, 1200 and 1180. A break of 1180 would have serious bearish implications for gold and suggest a decline to 1000-1050 in the short term, though this now looks unlikely unless we break below 1250.
Resistance can be found at 1307, 1318-1322, 1330-1332, 1340-1342, 1352-1354, 1392-1395, 1400, 1420 and 1435. The impulsive breakout above the down trend line on the weekly chart suggests an end to the intermediate term down trend and that a significant rally is now developing.
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