By Fast Brokers – Gold is pulling back from intraday highs as we notice similar weakness in both the EUR/USD and AUD/USD. Hence, it seems gold’s negative correlation with the Dollar is in play. Investors are currently waiting U.S. Pending Home Sales and Factory Orders data points. We’ve yet to see how the Dollar’s correlation with play out in the beginning of 2010, so it will be interesting to see how the Greenback reacts to today’s data set. However, tomorrow’s ADP Non-Farm Employment Change figure should be more telling considering the Dollar’s December rally was triggered by a turnaround in U.S. employment. That being said, investors should keep a close eye on the Dollar’s reaction to tomorrow’s employment number since the FX markets could be in for some volatility. Meanwhile, gold is still trading above its highly psychological $1100/oz level and December lows are sitting comfortably beneath present levels. Therefore, gold has a few solid supports in place.
Technically speaking, gold has multiple uptrend lines serving as technical cushions along with 12/31, 12/30 and 12/22 lows. On an encouraging note, gold has set consecutive higher lows after bottoming out in December, and we are currently unable to form a noteworthy downtrend line. Therefore, gold could have some decent upward mobility should the Dollar weaken in reaction to upcoming U.S. data. Meanwhile, our 1st tier uptrend line could prove to be an important trend line since it runs through 10/28 lows, or the $1025/oz level. As for the topside, gold faces technical barriers in the form of 12/17 highs along with the psychological $1150/oz level.
Present Price: $1120.35/oz
Resistances: $1122.70/oz, $1128.09/oz, $1132.99/oz, $1137.41/oz, $1141.33/oz, $1145.40/oz
Supports: $1117.80/oz, $1113.99/oz, $1110.94/oz, $1106.54/oz, $1100.71/oz, $1097.15/oz
Psychological: $1100/oz, $1150/oz, December highs and lows
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