INTERMEDIATE TERM TREND BEARISH
SHORT TERM TREND BULLISH
VERY SHORT TERM TREND BULLISH
In our last update, we noted that gold was trading just above the support zone at 1695-1705 and needed to hold here to avoid a retest of the lows and a possible further sell off towards 1600.
We also noted that a move higher from here to recapture 1720 would likely attract further buying interest and a move towards 1770 would be the next target. It was our view that if the bulls could 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.
Since that update, the lows at 1675 were retested and successfully held. This retest was the trigger for an impressive $130 rally that has taken the price back above 1800, with 1850 firmly in the sights in the near term.
This 1850 level coincides with the upper boundary of the downtrend channel that has contained the price of gold since the August peak - a break above here should really ignite the buying and see the shorts scrambling for cover. The impressive recent chart action suggests that this may well be the end of the correction, though 1850 is critical resistance to overcome.
The gold price is now above both the 89 day Moving Average at 1785 and the 55 day Moving Average at 1747. The 200 day Moving Average at 1840, together with the 1850 level mentioned above, are the key levels that must be recaptured to reinvigorate the bulls.
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 34280, yet another all time high and the S&P 500 is currently at 4161, just below the all-time high of 4219 achieved late last month.
Oil prices pulled back to $57 after making new multi year highs around $68 a barrel at the start of March, though have now resumed their rally. Our current target for oil is $80.
In gold, support can be found at 1800, 1775, 1760, 1725, 1695-1705 and 1675. In the medium term, we still expect further gains in the gold price and would suggest a move towards 2350 later this year remains likely.
Short term resistance can be found at 1815-1820, 1840-1850, 1900, 1960, 2000, 2020 and 2080. Gold needs to break the key resistance levels around 1840-1850 to give the bulls the power to move back towards the all-time highs above 2000.