I’ve not cast my gaze over gold in detail for quite a while and it seems like maybe I should have. Much has been made of the approaching Chinese new year as a reason for it’s recent upward trajectory but I should think those buyers would have stocked up by now. The relaxation of import rules would be more of a factor as would the possibility of the Shanghai gold exchange looking to offer an offshore yuan spot contract this year. Also add in the recent dip in US optimism and you have a recipe for some bullishness.
We look like we’ve put a strong double bottom in at the $1179 level and gold is a very good contract for trading the tech.
Gold daily chart 20 01 2014
The August support line is under fire at $1263 but the whole $1260/70 area is still a source of resistance that needs to be overcome for a push higher. The 38.2 fib of the August swing down is at $1277 with the 50 fib at $1307 alongside a historical S&R level at $1309. There’s a fair bit to chew through.
I think a lot of the taper crowd are out of this market compared to stocks as the flush out last year would have burnt more than a few fingers, so it’s likely that we’re now trading a more settled fundamental and physically driven market. Certainly ongoing Chinese demand is likely to soak up any large falls but if that low does break then we could see $1100 tested at the very least.
