- LONG TERM TREND BULLISH
- INTERMEDIATE TERM TREND BEARISH
- SHORT TERM TREND BEARISH
- VERY SHORT TERM TREND BEARISH
Previously, we noted that we expected gold to find support around 1690, with a “last chance saloon” support level at 1675—a critical number for the bulls to hold. A break of 1675 would signal a further sharp decline to 1600.
Since that update, the lows at 1675 have so far held, though the rally has been quite weak and unimpressive, reaching a high just above 1750 before heading back down again. Gold is trading just above the support zone at 1695-1705 and will need to hold here to avoid a retest of the 1675 lows and a possible further sell off towards 1600.
A move higher from here to recapture 1720 would likely attract further buying interest and a move towards 1770 would be the next target. If the bulls can take the price above 1770, then the correction that has seen the gold price fall by 20% since August 2020 could almost be at an end.
The 89 day Moving Average is now at 1813, with the 50 day Moving Average at 1786. The 200 day Moving Average at 1839 is the key support level that must be recaptured to reinvigorate the bulls.
Equities continue to grind higher, fueled by unprecedented amounts of financial stimulus and liquidity and record low interest rates and continue to make all-time highs on a regular basis.
After shallow pullbacks at the end of January and February, the Dow was at 32940 after making a new all time high earlier this month at 33231 and the S&P 500 was at 3950, just below the all-time high of 3988 achieved earlier this month.
Oil prices have pulled back after making new multi year highs around $68 a barrel at the start of March. We noted previously that while the chart remains bullish, it looked overextended in the short term, so this retrace is no surprise. Our current target for oil is $80.
In gold, support can be found at 1695-1705, 1675, 1650, 1600, 1560, 1500 and 1455. In the medium term, we still expect further gains in the gold price and would suggest a move towards 2150 later this year remains likely.
Short term resistance can be found at 1722, 1740, 1760-1770, 1828-1838, 1900, 1960, 2000, 2020 and 2080. Gold needs to break the key resistance level around 1960 to give the bulls the power to move back towards the all-time highs above 2000.