30 Dec 2013
Gold opens week lower after hitting Fibo resistance at 1218.85 Friday; 1172 is bears’ target
FXstreet.com (Barcelona) - Gold may have set a short-term top early in the US session Friday when the DXY appears to have bottomed. Light data flow and trading this coming week mean anything can happen, though.
Gold catching the attention of a percentage of traders and analysts
Recently – at least until early in the US session on Friday - we saw a short-term divergence between US interest rates (moving higher – appropriately so given the Fed’s tapering announcement of last week) and the US Dollar Index (moving lower inexplicably given the move in rates). Gold, silver, copper and crude oil had all been on the rise in reaction to the DXY’s sluggishness.
Friday’s intraday reversal may have signaled an end to the bearish divergence in the DXY. If rates remain buoyant and the DXY continues to turn higher, it will almost certainly spell trouble for gold and silver. However, crude and copper may be more tied to global economic prospects than the movements of the US Dollar. If playing the side-effects of a rising DXY, technicians are saying the best bearish bet should be on precious metals – and gold in particular.
Technical outlook for gold
Technicians say that if the most bearish scenario plays out that the ultimate downside target for gold is 1,065. However, gold will obviously see support at last week’s low of 1186. If that level breaks, gold may very well see some buying interest at the 6/28 low of 1179.80 and the Fibonacci projection of 1172. Resistance comes in at the last week’s high of 1218.90 which is backed up by the recent pivot high at 1250.
Gold catching the attention of a percentage of traders and analysts
Recently – at least until early in the US session on Friday - we saw a short-term divergence between US interest rates (moving higher – appropriately so given the Fed’s tapering announcement of last week) and the US Dollar Index (moving lower inexplicably given the move in rates). Gold, silver, copper and crude oil had all been on the rise in reaction to the DXY’s sluggishness.
Friday’s intraday reversal may have signaled an end to the bearish divergence in the DXY. If rates remain buoyant and the DXY continues to turn higher, it will almost certainly spell trouble for gold and silver. However, crude and copper may be more tied to global economic prospects than the movements of the US Dollar. If playing the side-effects of a rising DXY, technicians are saying the best bearish bet should be on precious metals – and gold in particular.
Technical outlook for gold
Technicians say that if the most bearish scenario plays out that the ultimate downside target for gold is 1,065. However, gold will obviously see support at last week’s low of 1186. If that level breaks, gold may very well see some buying interest at the 6/28 low of 1179.80 and the Fibonacci projection of 1172. Resistance comes in at the last week’s high of 1218.90 which is backed up by the recent pivot high at 1250.