Gold’s recent bullish break out of the near-term consolidation phase has not been sustained hence it can have negative implications said a report by Standard Bank. “We are not currently expressing a bearish view, as gold has not broken below any significant support points-a neutral stance is adopted, with continued consolidation anticipated,” said the report.
Primary support remains at $845/oz and, above this level the general outlook for the yellow metal remains favourable it said.
Interim support for gold is situated at $894/oz, $874/oz and $857/oz. Resistance points are highlighted at $934.90/oz and $950/oz prior to the recent $987.75/oz high said.
Gold prices took a sharp tumble in the latter part of July and the low fix for the month at $897.50/oz was the lowest since the afternoon of 25 June, when it fixed at $882.75/oz. The slight recovery thereafter has meant that the price has moved again above $900/oz and at end-July it was 28% higher than at end-July 2007.
July saw gold open near $940/oz, dip briefly, rise to exceed $980/oz in midmonth and then fall heavily. The decline came as oil started to slide and the US yield curve flattened with investors moving into Treasuries, particularly at the short-dated end, as part of a fresh risk-aversion exercise. At the end of July gold was 28% higher than at end-July 2007.
“If renewed strength beyond $987.75 occurs, we are uncertain high how the market will trade, with the $1,030.80 high providing the next significant barrier. On the downside, a move below $845-confirmed through $838-will turn the outlook bearish, and we would expect the market to follow through towards $780 from where a recovery will be forecast,” it said.