There’s a Chinese expression that can be roughly translated as “Big guns shoot gold.” That’s what happened last week, and it may well be what happens this week.
Last week gold futures were gently drifting lower until news that the civil war in the Ukraine is getting hotter crossed the tape. Then they bounced $25 in a couple of hours to touch the previous week’s high at $1305 before settling back to close the week at $1299.
The main driver of price action in gold this week will be political events, and specifically the civil war in Ukraine. But the technical aspects of the chart are still exerting a strong influence.
For example, last week the price decline stopped precisely at the 1278 support level we posted last week (you can see that call at naturus.com/gold) and the rally ended at precisely the previous week’s high. Those are not random movements.
This week those technical factors will still be in play. The key level for the week will be $1310. If the price moves through that resistance, the first target is $1325-28; the second is $1340-45.
If the price fails to move through that resistance, the downside target is a re-test of last week’s low around $1278-80.
We expect the shooting in Ukraine will continue and perhaps intensify this week, so we are expecting to see more buyers than sellers in the gold futures market.
Chart: Gold Futures, Apr. 2, 2014
= = =
Read the latest issue of our quarterly TraderPlanet magazine here
