Richard Perry
Independent Analyst
Gold
The last few sessions have seen the bull move higher on gold hitting a period of consolidation. As the dollar has weakened this has resulted in a variety of markets pulling strong rallies, but gold has just begun to lag other moves. The candles have become far less decisive, lacking conviction with small real bodies and longer shadows. We have been considering the prospect of a corrective move developing on gold, but the bulls seem happy to support the market even as the run higher has just hit the buffers. Although the daily chart shows a dip back lower early today, the move once more seems to be well supported. Consolidation is beginning to weigh on the daily momentum too, with the Stochastics losing their impetus and RSI tailing off in its advance. There is still a positive bias to gold, with yesterday’s bull candle certainly helping this, but it was interesting to see the 76.4% Fibonacci retracement (of the original $1445/$1702 rally) around $1642 being the basis of resistance. The hourly chart shows a mini trading range now $1585/$1642 whilst momentum indicators settle into far more of a consolidation configuration (with a mild positive bias). Closing above $1642 re-opens the $1702 key high, whilst below $1585 is a correction and would likely provide the next medium term buying opportunity. We remain positive on gold medium to longer term, but an uncertain near term outlook has developed.
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