Gold surged past our 2nd tier downtrend yesterday after the IMF announced that India made a large bullion purchase from the monetary fund's stockpile. Gold's technicals were already working in the topside's favor, making yesterday's breakout explosive. Furthermore, gold managed to make yesterday's key topside movement without the full cooperation of the Euro and Aussie. In fact, gold's impressive breakout could signal another round of weakness in the Dollar. Regardless, gold's momentum continues to work in favor of the topside as investors and governments try to diversify their assets and decrease their dependency on the Dollar. Meanwhile, central bank meetings will be in focus for the next 24-48 hours, meaning volatility in the FX markets should increase. Therefore, investors should expect further volatility in gold, especially considering the precious metal made such a bullish movement.
Technically speaking, we're at a loss of downtrend lines and historical perspective again. Therefore, the psychological $1100/oz level serves as our only trustworthy topside technical for the time being. Speaking of which, gold stopped just short of $1100/oz, hinting that the level could have a near-term psychological impact on investors. As for the downside, we've readjusted our uptrend lines, giving us an idea of support to go along with the psychological $1075/oz level. Meanwhile, gold's near-term activity could take its cue from the Dollar. Hence, investors should monitor any technical breakouts or setbacks in either the EUR/USD or AUD/USD.
Present Price: $1091.30/oz
Resistances: $1091.49/oz, $1092.77/oz, $1095.77/oz, $1100.04/oz
Supports: $1087.85/oz, $1085.28/oz, $1083.14/oz, $1079.93/oz, $1075.01/oz, $1069.89
Psychological: $1100/oz, $1075/oz.