Gold Daily Commentary for 4.27.09

Gold is weakening Monday despite U.S. equities prepping to open lower.  The precious metal is edging below our 3rd tier uptrend line, and a breather from recent gains isn’t too surprising.  Gold seems to be making a commitment to $900/oz+, a key development fundamentally.   The precious metal is still finding strength in the knowledge that China is diversifying more of its reserves towards gold. 

Furthermore, gold is thriving in the fact that the S&P futures have been unable to break out of their own key fundamentals.  However, one cause for concern for gold is the fact that CPI data continues to trend downwards worldwide, reigniting the fear of deflation.  Deflation wrapped its hands around gold during the height of the economic crisis, dragging down the precious metal with equities. 

Hence, it is reasonable to stay cautions on a medium-term trend basis.  That being said, we have some very interesting, longer-term trend lines playing key roles in our analysis.  If gold were to climb above our 3rd tier downtrend line, we could see the precious metal explode to the upside. 

Then again, we must take note of the downtrend, and the fact that the recent progress made can be wiped away.  Gold is trading above our 3rd tier uptrend line and the ball is in the uptrend’s court until further notice.  

Fundamentally we find resistances of $913.47/oz, $916.16/oz, $919.54/oz, $922.69/oz, and $925.04/oz.  To the downside, we see supports of $910.88, $908.86/oz, $905.94/oz, $903.83/oz, and $901.41/oz. Gold is currently trading at $912.15/oz.

Gold Daily Commentary for 4.27.09

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