With a degree of near term profit-taking setting in, the 23.6% Fibonacci retracement has become a key gauge. We continue to see near term weakness within the 3 month uptrend as a chance to buy.
Gold is running once more with strengthening correlation to moves on US Treasury yields. Falling yields are positive for gold. The swing of risk appetite is back as a key gauge for near term moves on gold.
Fundamentally we remain medium-term bullish, due to the increasingly dovish interest rate expectations and increasingly negative real yields. We see any near term weakness therefore as a chance to buy whilst markets remain spooked by Coronavirus. Volatility across markets could provide another drop on gold, but we see this would be an opportunity. Equally, we cannot rule out another margin call related sell-off similar to that on 28th February, but once more this would be a near term phenomenon that would be a chance to buy.
- $1642 – 10th March low and 23.6% Fibonacci retracement of $1445/$1702
- $1626 – 3rd March intraday low
- $1611 – old key breakout, January 2020 high
- $1667 – intraday highs – 10th and 11th March
- $1671 – intraday high 10th March
- $1685 – 9th March intraday high
We have been discussing the prospect of a near term gold corrective move in recent sessions. On a technical basis, a couple of negative candles in a row (even if Monday’s closing price was higher) has threatened this. Some interesting developments have occurred in the past 24 hours. Firstly a small top pattern completed below a pivot around $1660 which implies a target of around -$40. This rolling over has also posted a bear cross on Stochastics, whilst MACD lines and RSI have also lost impetus. We continue to see near term pullbacks within what is now a three month uptrend, as being a chance to buy. The market has though (positively) already found support around the 23.6% Fibonacci retracement (of $1445/$1702) at $1641. The near term outlook is subsequently mixed. It would turn positive again above a lower high of $1680, whilst closing decisively back under $1660 leaves the corrective momentum in place. Below $1641 the target of $1620 resumes.