Gold Report 3rd April
Gold plummeted over $20 last night as the Dow and S&P 500 made new record highs following news that there will be changes to Obama’s Medicare reimbursement rates catapulting health insurers higher. Factory Orders provided further evidence the US may be entering a period of sustained economic growth and the bulls will be hoping such positive data is a good precursor to the vitally important US Non-Farms this Friday.
Gold has fallen over another $10 today reaching a low of $1563.29 before bouncing a few dollars. This sharp drop in gold feels unsubstantiated from a fundamental angle as nothing major has change in the economic picture overnight. The extent of the move feels unjustified therefore a retracement trade should be on the cards. Since the beginning of last night’s fall the downward legs are getting shorter and less forceful indicating trend exhaustion and a probable retracement within the next 48 hours. Be patient before you pull the trigger and wait for a higher low on the 15 min or 1 hour before executing a buy. In addition since the 1stleg of the descent last night the RSI has made a higher low so be poised for the indicator to cross up past 30 as this can be a good buy signal for the short term.
As I mentioned in my Monday analysis $1590 was a key level for understanding the medium term trend. Now price has pushed lower than this level we are in an established downtrend therefore use Fib retracements and bearish trend lines to aid short executions at the appropriate time.
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