Gold Analysis 12th November Weekly Forecast, Technical Analysis, News
Gold Market Sentiment Overview – Gold ended the week around the $1730 per ounce level on Friday, after moving as high as $1738.71, a two-week high for the precious metal. A risk aversion tone has dominated throughout the week with the S&P 500 index (often seen as a barometer for risk) experiencing its worst weekly percentage basis drop since June. The S&P 500 printed a decline of 2.4% over the week.
Broad based dollar strength (see our latest dollar index update) has been found this past week, which would often signal a decline for gold. However, gold bullion has recorded the first weekly basis gain since early October, and increased in value by over 3%.
Inflows into Gold ETFs have come in at over 10.5 tonnes over the last three trading days alone. Interest in gold exchange-traded funds has picked up recently as the ultra-loose monetary policy from central banks, with an associated debasement of currencies, remains a key focus for the investing masses; as does the fiscal cliff and European debt crisis.
Gold Technical Analysis Overview
- The XAUUSD chart shows a bullish engulfing candle has formed on the back of the 3% increase in value for gold this week. The ultimate low of the week came in just above the 50% retrace of the last swing lower, from the $1800 area resistance.
- We have recently highlighted this area as a potential resistance zone with the 50% retrace aligned with prior support lows from 26/9/12 at $1736.
- If price can move above last weeks high the 61.8% retrace level comes in around $1750 and is a potential resistance level in its own right.
- We continue to see the $1800 area prior resistance zone as a key factor; with this in mind, speculative longs may now be entering in anticipation of a break above $1800.
- The corrective risk is for a reversion to the recent range, as the current $1730 area marked the last two weekly highs as can be seen on the W1 Gold (XAUUSD) chart below.