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Oil Falling Sharply After Failing To Hold Key Support Of $103

ByGoldTradingExperts.com
Published 10/22/2013, 06:14 AM
Updated 07/09/2023, 06:31 AM
GC
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After surging higher following the resolution of the debt ceiling and Federal budget debacle in the US last Thursday, gold has traded in a very narrow range with strong resistance encountered in the $1322-$1325 range and support around $1310.

The lack of follow through after breaking out of the down trend channel is concerning for the bulls, who will have seen Thursday's move as the catalyst for further gains. We still consider the downside to be the path of least resistance and, unless gold can break out above $1325 this week, a return to $1300 is likely. A break below $1300 will suggest a return to test support at $1250.

Oil is falling sharply after failing to hold key support $103, which has now become resistance. A move back to the 200 DMA at $97.40 is now likely. This is potentially a bearish factor for gold, however the usual correlation between gold and oil has not been particularly evident recently.

Equities remain very strong near all time highs, a major bearish factor for gold, whilst the dollar appears to have stabilised following the recent rout, with the credibility of the US taking a serious dent following the debt ceiling and budget "negotiations". We maintain that no significant rally will be seen in gold until we see a meaningful correction in equities.

Support can be found at $1310, $1300-$1305, $129$1, $1277, $1260, $1250, $1207 and $1180. A break of $1180 would have serious bearish implications for gold and suggest a decline to $1000-$1050 as a minimum.

Resistance can be found at $1322-$1325, $1330, $1338-$1342, $1353, $1375, $1400 and $1434. A break above $1434 would suggest a major rally was unfolding with a target of $1525 as a minimum.

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