Gold rallied strongly during the week to key resistance above $670 which now threatens to end the corrective downtrend from $698 that has seen gold fall to a low of $641 three weeks ago.

Gold Outlook

The break above $666 changes the nature of the downtrend from the $698, as it now implies immediate strength and support for Gold.

Key resistance between $675 and $680 held the immediate uptrend. A Break of this resistance area would immediately target a move to the $698 high which would be expected to break and signal the move to continue towards the high set during May 06 at $730.

However, Gold has yet to break this resistance area, and therefore the corrective downtrend from $698 still remains intact, despite last weeks strength. The most likely outlook for gold over the coming week is to consolidate between $675 and $650.

Key levels of importance for the consolidation scenerio are for gold to hold the $646 low. A failure here would target $641 which would be expected to break and signal a continuation of trend lower towards the $600 target for the corrective downtrend.

The Lower MACD indicator is currently in an uptrend and gave a bullish cross over a week ago which signaled support for Gold and confirmed an immediate uptrend towards resistance.This pattern is expected to continue to support Gold over the coming week.

Summary

The break above $666 has strengthened Gold, expectations are for Gold to consolidate before attempting to break higher above $680, towards $730. A failure to hold $646 / $642 would signal a continuation of the corrective downtrend towards $600.

By Nadeem Walayat
(c) Marketoracle.co.uk 2005-07. All rights reserved.

The Market Oracle is a FREE Daily Financial Markets Forecasting & Analysis online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

This article maybe reproduced if reprinted in its entirety with links to http://www.marketoracle.co.uk

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.