14 Nov 2013
Gold showing bullish signs short-term – at least from a candlestick standpoint
FXstreet.com (Barcelona) - Gold futures posted an inverted hammer candle (a potential bullish reversal candle) Wednesday and has followed that up with a solid gap up Thursday which, if it holds, would confirm the bullish short-term reversal.
Gold clearly trading inverse to the movements in the greenback
It is well-known that gold and silver trade inversely to the movements in the US dollar – which obviously took a downward turn Wednesday and thus far Thursday on uber-dovish chatter out of the current and future Fed Chairpersons. The question now will be whether the US data stay soft enough to allow the Fed to remain as dovish as Bernanke and Yellen clearly desire. If the economic data come in strong between now and January - and barring any political shenanigans when Congress re-convenes on the budget and debt ceiling issues – even the dovish Janet Yellen will have a hard time justifying staying with the QE-forever stance. If that is the way things appear to be playing out, you can bet traders and analysts will pick up on that quickly and a solid floor in the DXY (and corresponding ceiling in gold and silver) will be put in place. If the data are not bullish or if the DC politics heat back up, the opposite reaction in the DXY and the metals will almost certainly occur.
Technical outlook for gold
Technicians say that if the bearish scenario plays out that the ultimate downside target for gold is 1,065. However, gold would likely see some buying interest at the October low of 1251 and the 6/28 low of 1179.80. Resistance comes in at the 11/1 high of 1327.30 and is backed up by the 10/28 high of 1361.80.
Gold clearly trading inverse to the movements in the greenback
It is well-known that gold and silver trade inversely to the movements in the US dollar – which obviously took a downward turn Wednesday and thus far Thursday on uber-dovish chatter out of the current and future Fed Chairpersons. The question now will be whether the US data stay soft enough to allow the Fed to remain as dovish as Bernanke and Yellen clearly desire. If the economic data come in strong between now and January - and barring any political shenanigans when Congress re-convenes on the budget and debt ceiling issues – even the dovish Janet Yellen will have a hard time justifying staying with the QE-forever stance. If that is the way things appear to be playing out, you can bet traders and analysts will pick up on that quickly and a solid floor in the DXY (and corresponding ceiling in gold and silver) will be put in place. If the data are not bullish or if the DC politics heat back up, the opposite reaction in the DXY and the metals will almost certainly occur.
Technical outlook for gold
Technicians say that if the bearish scenario plays out that the ultimate downside target for gold is 1,065. However, gold would likely see some buying interest at the October low of 1251 and the 6/28 low of 1179.80. Resistance comes in at the 11/1 high of 1327.30 and is backed up by the 10/28 high of 1361.80.