Gold's Strength Stalls

By Mohammed Isah of fxtechstrategy.com

Gold futures closed lower this past week after backing away from higher prices and then collapsing to erase part of the previous week's gains.

Click here to view a chart of gold futures.

The commodity still retains its medium- to long-term uptrend while holding above its longer rising trend line, which is currently at 1,060, and its 2008 high at 1,030.85.

This suggests that current price action remains corrective of the aforementioned trend and that the trend will resume at some point.

If 1,161.88, the Jan. 11 high, remains unsurpassed, then a decline toward 1,118.35, the Jan. 13 low, is expected, with a turn below there paving the way for a run at 1,093.21, the Jan. 4 low.

A break below there would put gold on the path to further downside toward the 1,074.80 level where a halt could be seen.

The weekly relative strength index is pointing lower, suggesting further downside weakness.

On the other hand, if gold breaches the 1,161.88 level occurs, further strength should build up toward another chart level at 1,168, the Dec. 8 high, followed by 1,200 and then 1,226.37, the 2009 high.

On the whole, although gold is seeing corrective declines, the metal retains its medium- to long-term uptrend.

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