Gold Boosted By Weak Non Farm Payrolls As USD Falls

LONG TERM TREND: BEARISH
INTERMEDIATE TERM TREND: NEUTRAL
SHORT TERM TREND: BEARISH
VERY SHORT TERM TREND: BEARISH

Gold was boosted on Friday by a weaker than expected Non Farm Payrolls number from the US that saw the dollar fall as the prospects for an interest rate in the US declined slightly.

However, this morning the bearish trend has reasserted itself, with the dollar finding support after a dramatic gap down in GBP/USD following two opinion polls suggesting that the Sottish independence vote is likely to be very close, with the "Yes" camp taking a slight lead for the first time.

Gold has broken down out of the intermediate term triangle pattern on the daily chart, suggesting a return to $1180 is a likely outcome. The next level of support is $1240, with little below here before the major support level of $1180. A break of this level would be seriously bearish, with $1000 likely to be seen in short order if it yields.

The weakness in oil and continued strength in equities and the dollar add to the bearish picture in gold and we see little reason to buy gold at this level. Only a break back into the triangle pattern and a rally to (and ultimately through) the upper boundary would invalidate our bearish stance.

Support can be found at $1262, $1257-$1260,$1250-$1252, $1237-$1240, $1220-$1225, $1210, $1200 and $1180. A break of $1180 would have serious bearish implications for gold and suggest a decline to $1000-$1050 in the short term - a failure to break the 65 week MA would make this scenario much more likely.

Resistance can be found at $1271-$1273, $1276-$1277, $1290-$1292, $1300-$1302, $1310-$1312, $1322-$1325, $1333-$1335, $1340-$1342, $1352-$1354, $1392-$1395, $1400, $1420 and $1435. A second failure to break through the key 65 week MA would suggest that the intermediate down trend is intact and a retest of $1240 and possibly $1180 is likely.