LONG-TERM TREND: BEARISH
INTERMEDIATE-TERM TREND: BEARISH
SHORT-TERM TREND: NEUTRAL
VERY SHORT-TERM TREND: BULLISH
We noted in our last update that gold was falling precariously close to support at 1233-1235 and that a break of this level would likely see an acceleration to the downside.
Gold broke through the support trendline on 3 July and did indeed fall sharply, however the price found support at 1205 and has since bounced back strongly. The gold price is currently just below 1250 and has broken back though the trendline, however the price has arrived at the 50 DMA, which could provide some resistance, with further resistance at the Fib levels just above 1250.
We feel that it is likely that the rally in gold is likely near an end and the next leg down is likely to begin from around the 1250 area. The price did make a “lower low” at 1205 and a “lower high” here (anywhere below 1295) will be seen as confirmation of the bearish case. A break below 1200 should see a rapid decline back towards the low 1100s.
Equities remain in favour, with the rally showing no signs of abating. Any selloffs continue to be seen as buying opportunities, with the Dow very near all-time highs around 21,600 and the S&P at 2,470.
The rebound in oil continues after the dramatic sell off in May and June that saw a low of $42 a barrel, with the price of a barrel of oil now trading near $47. It remains well shy of the highs around $55 at the start of 2017.
Support can be found at 1242, 1235-1237, 1228, 1214, 1200, 1193, 1180, 1145, 1122, 1100, 1072 and 1045. The recent sell off and yet another rejection of the long term down trend line is bearish for gold in the long term time frame and suggests a move towards the 2016 lows is increasingly likely, unless gold can break above the 2011 down trend line.
Resistance can be found at 1249-1253, 1259, 1265, 1275, 1280, 1288 and 1296-1300. Gold needs to break the key resistance level at 1296-1300 to give the bulls some momentum and long term control.