logo
  Join        Login             Stock Quote

Short Term Weakness Seen In Gold

 February 13, 2011 06:23 PM


The price of gold of XAU/USD in the commodities market could be due for a correction in the near term. As you can see from its 4-hour chart above, gold has rallied nicely after hitting a low of $1,308.200 per ounce on January 28, 2011 after reaching a high of $1,423.69 on the first trading day of the new year. Gold was able to rebound from the said low and is now trading at $1,356.11. Using the high on January 3 and the low on January 28, gold has retraced all the way to its 50% Fibonacci retracement level. For the last 5 days, gold attempted to move above this level but it was not able to do so. Notice also that during this period, it has traded within a rising wedge which technical analysts consider as a bearish formation (a rising wedge represents a rally in prices). Therefore, a failure to break above the 50% Fibonacci retracement level and a breach of the wedge's support could send it back to its former low near $1,310.00.

Over the longer term, however, it appears that the gold bulls remain to be in control of the driver seat. An upside breakout from a continuation inverted head and shoulders pattern way back in October 2009 eventually pushed gold past its target. If you remember, gold had tiptoed around $1,400.00 for the most part of November 2010 to January of this year. Despite a likely weakness in the short term, gold's uptrend line would most likely support its fall and even push it back towards its recent highs. As long as this uptrend line does not buckle, the long term bias for this precious metal remains to be bullish. Moreover, a presence of a bullish hidden divergence, where the price registers higher lows and the stochastics mark lower lows, suggests a probable pick up its in price in the coming week or so.

iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageChart Says This Retailer's Comeback Isn't Finished

One of the surprises, at least on the surface, of the market's recent swoon was the outperformance of read on...

article imageETF Performance Review: Major Asset Classes | 19 Dec 2014

It’s all about real estate investment trusts (REITs) these days when it comes to bullish performance among read on...

article imageOil and Global Stock Markets Rebounding Sharply

So far so good on our expectation of a 4 to 5% pullback and then a resumption of the bull read on...

article imageGrading the FOMC

Love its members or loathe them, you have to admire the gradual impact the policy-making committee has had read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.