Gold Weekly Technical Outlook

Gold's sharp fall on Friday suggests that recovery from 1185 is finished at 1218.8 already. Initial bias is cautiously on the downside this week. Break of 1185 will confirm that whole decline from 1266.5 has resumed and should target 61.8% projection of 1266.5 to 1185 from 1218.8 at 1168.4 next, which is close to 1166 key support. On the upside, above 1218.8 will turn bias neutral and bring more consolidations. But after all, we'd maintain that risk remains heavily on the downside as long as 1266.5 resistance holds.

In the bigger picture, gold's rally from 1044.5 should have completed at 1266.5. More importantly, whole medium term rise from 681 might have finished with five waves up too, on bearish divergence condition in daily MACD. Sustained trading below 55 days EMA (now at 1205.8) will affirm this case and bring deep correction to 1044.5 cluster support (38.2% retracement of 681 to 1266.5 at 1042.8) at least.

In the long term picture, we're proposing that 1266.5 is an important medium term top in gold and we should see a sizable correction going forward. A breach of 1000 psychological level is possible. However, there is no indication of long term up trend reversal yet. We'd maintain the long term bullish view and expect whole up trend from 1999 low of 253 to continue to 100% projection of 253 to 1033.9 from 681 at 1462 level after completing the correction from 1266.5.

Source : Internet

Gold futures fell hard Friday, tracking other assets after a drop in consumer sentiment battered stocks and a report showing benign inflation for June offset gold buying on inflation fears.

Gold for August delivery lost $20.10, or 1.7%, to $1,188.20 an ounce on the Comex division of the New York Mercantile Exchange. It was gold's largest one-day drop since July 1, and the lowest settlement price since May 21.

"We are seeing a positive correlation between gold and equities," said Adam Klopfenstein, senior market strategist at Lind-Waldock.