Gold Holds Strong above $1100/oz
Monday, December 21st, 2009Monday, December 21, 2009
Gold has popped back above our 3rd tier uptrend line after a retest of the psychological $1100/oz level in reaction to the Fed’s more hawkish monetary policy statement last week. Gold’s resilience above $1100/oz is encouraging, yet not surprising considering its prevalence during November. Meanwhile, the Dollar is stabilizing a bit after an impressive bull run. The data wire is relatively quiet today and volume should decline as investors begin checking out for Christmas. However, the EUR/USD and GBP/USD have dropped below some key uptrend lines, meaning if these currency pairs don’t stage a run soon they may enter another wave of Dollar strength. Hence, investors should continue to monitor the interaction of major Dollar crosses with their respective supports since gold is negatively correlated to the Greenback. Meanwhile, economic data will pick back up tomorrow with the release of Final GDP from the UK and U.S. along with U.S. Existing Home Sales. Positive U.S. economic data continue yield further Dollar strength, a negative catalyst for gold. In addition to upcoming econ data releases, the BoE will announce its monetary policy decision on Wednesday. Hence, volatility could increase as the trading week progresses.
Technically speaking, gold still has multiple uptrend lines serving as technical cushions along with 12/11 and 12/18 lows. Furthermore, the psychological $1100/oz level should continue to serve as a reliable technical support should it be tested. As for the topside, gold faces topside technical barriers in the form of 12/11,12/9, and 12/7 highs along with the psychological $1150/oz and $1175/oz levels.
Present Price: $1116.30oz
Resistances: $1119.35/oz, $1123.03/oz, $1128.34/oz, $1134.47/oz, $1141.42/oz, $1147.54/oz
Supports: $1114.45/oz, $1110.77/oz, $1105.05/oz, $1100.15/oz, $1096.47/oz, $1088.30/oz
Psychological: $1100/oz, $1150/oz, $1175/oz
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