XULF Report
Writing this report this week feels like a broken record as it is just a repeat of previous analysis because the market continues to be range bound. The Organization for Economic Cooperation and Development lowered global growth forecasts and the IMF cut its growth estimate for China making investors trim down risk in equity markets. It does make one doubt the sustainability of the US equity rally if there is no growth or slowing growth elsewhere around the globe. Contrary to popular belief if we do see an equity correction triggered by global growth concerns and a tapering of stimulus gold could make some gains as fund managers diversify into commodities to manage the risk and uncertainty.
Gold is again hovering a few dollars under $1400 and has tested as high as $1397.80 this morning but has been beaten away by the bears for the umpteenth time. The 30 minute chart shows a bullish channel that developed yesterday which manifests the short sentiment. A sharp spike up in price seems to be easily defended by the bears therefore a good indication of a much awaited breakthrough will be if price steadily raises at a sustainable gradient and we see tight consolidation just under $1400. When taking into account the potential rewards of an upward breakout attributed to the prolonged building of pressure mainly between $1380 to $1400 it is worth taking a risk and buying on a pullback. The logical level for a stop loss is below the previous higher low of $1388 which is also below the bottom side of the channel. Short opportunities will arise if Tuesday night’s low of $1373 is broken. The reports to watch out for today are US GDP at 8:30pm and US Pending Homes at 10pm which could shift this static market if the technical fail to.
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