The technical rally from a near term breakdown has stalled around $1600. Near term corrective pressure continues to threaten, but it would be the source of the next buying opportunity.
A period of calm has taken over major markets today and gold has lost direction for now as its correlations just take a pause for breath.
There is little direction for gold to go on this morning as USD and US Treasuries lack intent.
The only mover seems to be a rebound on S&P 500 futures, which until very recently would have been gold supportive. However, it is interesting to see equities losing their pull on gold in the last two sessions. Could this be the beginning of no correlation, or a return to negative correlation?
Ultimately, the mixed signals on gold continue to play out during these volatile times for financial markets. Again today, gold lacks certainty, but we expect traditional correlations to re-assert in the weeks to come. Looking longer term, once markets begin to settle, with real yields expected to remain low and negative with the massive easing of monetary policy, we expect gold to remain supported and medium to long term positive.
- $1565 – 1st April low
- $1560/$1562 – old pivot and 31st March low.
- $1553 – neckline of recovery breakout
- $1600 – 1st April high
- $1612 – Intraday high, 31st March
- $1627 – Intraday high, 30th March high
The immediate technical rebound from Tuesday’s sharp decline as clouded the outlook slightly on oil once more, however, looks not to have been enough to put the bulls back in the driving seat. The sharp negative candle is still the over-riding near term technical feature, and is one that is weighing on technical indicators. Daily Stochastics and RSI are beginning to drift lower, whilst MACD lines are flattening around neutral. The hourly chart reflects this deterioration in configuration, with the hourly RSI failing consistently under 60 and MACD lines consistently under neutral now. It is also interesting to see yesterday’s rally faltering under the near term overhead supply between $1584/$1610, with a potential lower high at $1600. There is a mild negative bias now forming, suggesting that this rally is fading and that pressure on the $1553/$1560 band of support is preferred. We still see near term corrective moves (which we believe this to be still in process) will be chances to buy for medium to longer term upside and a retest of highs in due course.