This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Gold rally could come under pressure
Gold is managing to gain ground this morning, following on from an intraday head and shoulders breakdown yesterday. Given that sharp rally into the 76.4% retracement ($1352) over the past week, there is a strong chance we are going to see the two-month descending channel continue apace. With that in mind, we are looking out for some further weakness come into play to reverse some of the recent gains.
From a wider perspective, we would need to see a break above $1358 to breakout from the channel. However, for now, we are trading within a rising wedge pattern (bearish), which points towards a likely break down. As such, while we may not reach the 76.4% level to get short ($1350), the 70% or 61.8% levels still offer interesting areas.
Conversely, a move back above $1352 would point towards a continuation of this recent rally.