Elliott Wave Bias - Gold

The next major support for Gold is not until 1005 (former breakout level).  Even then, I expect that level to be taken out without much of a fight as the deflationary environment has returned with a vengeance.  Gold has reached resistance from Fibonacci (and former support), which extends to 1094.  The retracement is satisfactory; favor the downside.

Bias: SHORT

GOLD: Corrective Strength To Target The 1,125 Level

GOLD (Futures): A breather was seen the past week following the commodity’s resumption of its declines activated at the 1,226 level, its 2009 high. That strength saw Gold break back into its earlier broken longer rising term trendline and its Jan 28’10 low at 1,073.95 to close the week higher at 1,093.30. Though still retaining its broader downside bias, immediate risk remains higher for further strength towards its Feb 03’10 high at 1,125.00 where a cap is expected to turn the commodity back down again. However, if that level gives in we may see more momentum build up towards its Jan 20’10 high at 1,141.48. On the downside, the 1,093.95/30 levels, representing its Jan 28’10 low/trendline support will come in as the initial support with cut through there targeting its 2010 low at 1,044.20. A clean break below there will resume its short term downtrend towards the 1,030.85/1,026.55 levels, its Mar’08 high/Oct 28’09 low and then the 986.67 level, its Oct’09 low.

GOLD: Holding Above 1,073.95 Level With Caution

GOLD (Futures): Although Gold reversed a larger part of its Wednesday losses to close marginally lower on Wednesday, it remains vulnerable to the downside as price hesitation has set in though it is currently trading above its broken rising trendline. With the importance of that zone, the commodity has to firmly hold above there to initiate further upside recovery towards the 1,104.08 level, its Jan 25’10 with a turn above there exposing its Feb 03’10 high at 1,125.00. The latter level is expected to reverse roles and provide resistance thus turning the commodity back down. On the downside, support comes in at the 1,072.14/1,073.95 levels with a break below there pushing Gold further lower towards  the 1,044.20 level, its YTD low. A loss of the latter will resume its short term downtrend towards the 1,030.85/1,026.55 levels, its Mar’08 high/Oct 28’09 low and then the 986.67 level, its Oct’09 low. On the whole, broader bias remains lower though the commodity is seen correcting.