Gold: key resistance thwarting upside at $1,328

After a hefty rally yesterday the gold price is taking a breather today after hitting some resistance at 1,328 – the 100-day moving average. The driver of gold price strength appeared to be dollar weakness and the decline in Treasury yields, rather than safe haven flows. Ahead today, a slew of Fed speakers could impact the price of gold, if they sound dovish then we may see further gains for the yellow metal. Throughout the recent stand-off in Washington the yellow metal struggled, suggesting that it is not the asset of choice to hedge US political risk. Thus, the future direction of the gold price could be dependent on the buck.

Technical outlook:

Gold ran into a wave of selling pressure this morning after getting rebuffed at $1,326 – close to the 100-day sma at $1,328. Key downside levels include:

$1,315 – trend channel support and key ST level.
$1,299 – 200-hour moving average.
$1,270 – 16th Oct low.
$1,250 – the lowest level since the July sell-off.

Takeaway: Gold is retreating today, but if we get a weekly close above $1,315 this would be a bullish development as it could suggest that we have broken the recent downtrend, which would open the way to $1,344- the 50-day sma. However, this may depend on the outlook for the dollar, so keep an eye on the greenback and US Treasury yields to get a sense of where the gold price may go next.

Source: Forex.com

18.10.2013