Gold Analysis 29th June – Gold Strength On EU Summit News
Gold has seen major strength today and pared back recent losses. Few analysts were forecasting such an outcome but as Wall Street opened today a “risk-on” market has resulted following the positive news from the EU summit. Further investigation into the details could see the bears once again return but as the week draws to a close the market is buying into the positive news. The dire prognosis of events following the summit has not transpired and a heavily short market is now liquidating bearish positions and potentially anticipating a squeeze on shorts heading into next week
Gold Strength Seen In line With Risk based Assets
The price of gold hs rallied as high as the $1600 handle in early US trading which is over 2.5% up from the range lows yesterday. – global equities, commodities and “risk” correlated currencies have also benefitted from the European Union summit agreement from Brussels.
EU policy makers have requested the European Council considers a proposal for the introduction of a Euro-zone banking supervisor. This would potentially see bailout funds used directly for recapitalization of banks and cut out the respective governments involvement. Spanish 10-Year government bonds yields have dropped to the lowest levels seen this week as have Italian 10-Year yields.
Further examination of the detail behind this summit agreement could see further downside volatility unfold heading into next week buit the bulls are firmly in control for now.
Gold Technical Analysis Update
- Price has recently moved as low as $1547 on the 18th June and the false breakout below $1560 area lows could see weak shorts trapped in unwanted positions.
- The upside move today has taken out the recent range highs around $1585 and a re-test of this area could potentially result in previous resistance becoming support.
- We still see the $1530 area as a key demand level (as can be seen in our recent gold analysis updates) and we view this as a zone – as support and resistance is not always respected to the pip. We maintain a conservatively bullish outlook while price trades above $1530.
- The $1630 area range highs could now potentially be viewed as a target for the price of gold in the near to mid-term.
Gold Chart Analysis – 4 Hour Timeframe
Gold look every bullish now. August gold contracts at the New York Mercantile Exchange Comex division gained on Friday closing at the $1,604.20 level per ounce, up almost 2.5% on this week.