Short-term Outlook
- After a phenomenal 1.5-month charge to a near all-time high of US$1006, Gold is likely to face some correction pressure in the near term, although the medium-term trend remains positive.
- While the MACD indicator remains very positive, it has just cut down; the RSI has also turned lower just below the overbought region, suggesting a possible near-term pullback.
- We expect the pullback to find strong initial support at US$883 (4-month uptrend line support and also 38.2% Fibonacci retracement of the rally from Oct’08 low of US$682 to Feb’09 high of US$1006) ahead of US$845 (50% retracement).
- We see immediate resistance at US$1006 (recent high), ahead of US$1032 (all-time high).
Medium-term Outlook
- We think there is potential for Gold to set a new high of at least US$1072 over the medium term.
- We note that the current 4-month uptrend (light blue line) is almost a carbon copy of the previous 7-month rally (dark blue line) in Aug ’07. - So if the current uptrend holds, we can expect it to at least emulate the previous one and rise towards US$1072 or higher.
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