width=398(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)

12/09/2009 - Gold - After hitting an all-time high just shy of 1226 late last week, price action on spot gold (a daily chart of which is shown) has retreated substantially to stall and tentatively bounce around the 50% Fibonacci retracement of the latest bullish run. The low-to-high retracement span for this latest bullish run is measured from the dip low on 10/29/2009 to the all-time high on 12/3/2009. This 50% level also coincides with the 161.8% Fibonacci extension of the prior bullish run (the retracement span in this case being measured from the dip low on 10/2/2009 to the high on 10/14/2009). This level at which price has just made a tentative bounce after the recent bearish pullback resides around the key 1125 price region. If this support level holds, it could potentially represent the launching point for a further extension of the current steep uptrend. In this event, the noted all-time high just below 1226 is the major upside resistance level to watch for. If the current support fails to hold, however, further major downside support resides around the 1070 price region, and then the 1025 price region.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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