Support & Resistance Levels Are Key To Golds Movement

Gold reversed its bearish sentiment late in the day and climbed almost $10 recovering most of this week’s losses and is trading at 1328.85 as traders bought up the cheap commodity. Market action seems to be buy on dips sell on tops.  Silver recovered 190 points to trade at 19.803. any corrective dips could find support and edge higher again. Such corrective dips are needed for this healthy uptrend to sustain and continue pushing higher.

The big picture has clearly signaled a reversal in trend to bullish before it was languishing in the $1,200 an ounce ranges earlier. A potential target lies at $1,450-55 levels being an equality target.

As cautioned in the previous update, some weakness is seen and the negative momentum could push prices lower again and supports were seen in the $1,305-10 range, being a rising trend line support level.

Prices have bounced from the support and hints at further upside from here initially towards $1,345 levels or even higher. Only an unexpected fall below $1,305 could postpone the bullishness and such a fall could see prices testing $1,275 levels but, edging higher from there once again.

As prices have broken certain important resistances and shows impulsive tendencies, we will now stick with the above count. And as mentioned earlier, once prices reach $1,025-45 levels we will look for any signs of reversal. There are signs of a turnaround, and prices convincingly risen in volumes and closed above $1,300 levels, which further reaffirms our wave count.

Gold remained above a three-week low on Thursday, as the dollar and European shares fell after the European Central Bank (ECB) left key interest rates unchanged, but better-than-expected US jobs data weighed.

The ECB held rates at record lows as it seeks to revive growth and inflation with cheap credit to the economy. It added that it still expects its key interest rates to remain at present or lower levels for an extended period. ECB President Mario Draghi told a post-meeting news conference that the Eurozone’s central bank was prepared to take more action to lift inflation and economic growth if necessary.

Gold is highly sensitive to rising rates, which increase the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. With the FOMC decision due next week traders are a bit cautious but odds are that the Fed will do nothing at all taking cues from the BoE and the ECB.

“The chief factor impacting gold is the Fed’s decision about an interest rate hike,” an analyst said.

“Recent data and … earnings season have stimulated speculation that another rate hike is back on the table and the odds of such will go even higher if the non-farm payrolls next month print another robust number.” Spot gold has found support at $1,313 per ounce, and may hover around this level temporarily before falling towards the next support at $1,298, said Reuters technical analyst Wang Tao.

U.S. economic data Thursday were mixed, offering few hints on investment demand for gold. A regional Philadelphia business index softened, while a separate national snapshot on jobless benefits claims improved.