This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Gold Might Test the Lows of Its One-Year Price Range

Does this mean gold is all set to bounce back for correction following a financial burst? First, a financial burst of 2008 intensity is unlike. The fundamentals do not support this.

Gold futures in the Comex division of New York Mercantile Exchange could rise to $1,525 an ounce, however, according to Kitco.

That won't happen overnight. Second, the recent unemployment figures, nonmanufacturing purchasing managers' index and early tapering of the Fed's quantitative easing program have made investors more optimistic about the U.S. economy.

Additionally, the Fed intends to keep the interest rates low in an attempt to promote economic growth and reduce risk chocking of the economy. Whatever the case may be, not all risk can be eliminated. An economic slowdown is not yet out of the question, which continues to make gold an attractive investment.

Short-Run Case: The Fundamentals and Technicals of Gold Futures

Gold traded to the upside after breaking a major resistance level at $1,334 an ounce. The move was mostly in favor of the bulls due to the news about Portuguese bank problems.

In addition, the upward move was also propelled by political tension in Middle East crises: Israel-Hamas, Israel-Gaza and Ukraine-Russia. However, it is yet unclear whether the upside surge was a result of new buying positions or stops triggered on the resistance level. It must be noted that the market closed lower at $1,338.21 after placing the previous week's high at $1344.91. This suggests that stop losses were triggered. An important level to look for is $1,334, which is the new support level. If gold traces back, it is expected that it will trade within the range of $1,309.69 to $1,334 per ounce for the next week.

Should the price fall to the $1,309 level, there is likely to be new buying. The $1,313.63 level is a major 50% Fibonacci level. Another important level to look for is $1,322.57, the center line of Bollinger Band or 20-day moving average. A successful defending within $1,322.57 to $1,330 will indicate that bulls are coming in with new buy positions.

For this week, investors are also advised to keep an eye on key U.S. data including retail sales, industrial production, unemployment claims and the preliminary University of Michigan Consumer Sentiment reading. In addition to this, new data are also expected from the world's second-largest gold buyer, China, which is set to release its GDP and industrial production figures.

Should the gold market move upward, the first resistance level to look for is $1,355 per ounce followed by $1368.89 and $1,389.54.

In sum, it is expected that gold will show a minor bullish trend this week but is not expected to break the $1,368.89 resistance level. But gold is expected to fall in the next week and will remain at a low price in next month.

At the time of publication, the author had no positions in assets mentioned, although positions can change at any time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs