The Technical Outlook For Gold Remains Bearish

$GLD

Gold’s recent advance ended last week when price failed to break through Key resistance at 1170, 1170 is where several technical indicators converge, including a Bearish trend line, the 100-Day MA, and the 38.2% Fibo retracement mark of this year’s trading range.

The fact that the rally stalled at 38.2% Fibo retrace mark bodes ill for Gold Bugs as it indicates the Bears are still in control which means that the path of least resistance is to the Southside.

So, it is more likely we will see lower rather higher prices for Gold, unless something changes dramatically about the precious Yellow metal’s weak fundamental outlook.

If Gold breaks through the 1120/5 resistance-turned-support range, as I think it may, then the next Bearish targets could be the 61.8% Fibo retracement mark of the most recent upswing at 1112/3 then South to 1100.

Some of the longer term technical marks to watch on the Southside is the July low at 1077, followed by the Fibo extension marks shown on the chart below.

On the Northside

There are at least 3 Key short-term resistance marks that need watching.

1. at 1145, which corresponds with this week’s earlier high

2. the Bearish trend line, and depending on the speed of the potentially rally, this may come in somewhere below 1160, which orresponds with the 100-Day MA, and

3. the August high at 1170 is the next Key resistance. If the latter breaks down then Gold may stage a significant rally as some of the existing sellers will be forced to abandon their positions.

India, the world’s 2nd-biggest Gold buyer after China, imposed the import restrictions last year to avert a trade deficit crisis that pushed the Rupee to record lows.

“Restrictions placed on import of Gold… stand withdrawn with immediate effect,” India’s central bank said in a statement on Saturday, 29 November.

Support for Spot Gold comes from jewelry demand from India in the lead up to and during the wedding season, which starts again in late September. India did record a 176% increase in Gold imports in August to US$2-B from about US$756-M.

Overall, the impact of wedding season Spot Gold  buying has faded in recent times as India is no longer the world’s largest Gold consumer, partly because of the on-going government  import restrictions on precious metals. If they are further relaxed, perhaps India will regain its Top spot.

India’s Akshaya Tritiya festival considered by India’s more than 900-M Hindus as an auspicious day to buyGold and Silver, fell on 21 April this year. Bullion is bought in India during festivals and marriages as part of the bridal trousseau or gifted in the form of jewelry by relatives.

Have a terrific holiday weekend

HeffX-LTN

Paul Ebeling