Gold starting to waver
Gold (XAUUSD) has enjoyed a mini rally of late but it is now starting to look like it’s suffering from altitude sickness. Having breached recent highs at $1300 it’s been unable to build on that success and press on to make further gains. To us this wavering tends to suggest one thing: that people are long and there are no fresh buying interests entering the market. What we would normally expect to see here then is a test to the downside, to trigger some of the trailing stops and flush out the long position holders. We don’t see this test as being too spectacular though, the market seems far more likely to drift off and perhaps re-consolidate under $1300 for a while before wandering off below $1275 and then $1250. We’d expect to find some measure of support below there, a likely place being the $1200-$1240 area.