Price of Gold expected to pull back to $900

Price of gold traded in the futures market has risen 43% in the last 3 months from US$700 per troy ounce in November to US$1,000. the last time I wrote the article on February 3, I have expected the price to pull back from US$899 to US$860 but the correction is sideways with the lowest at US$891 before continuing the up trend. I have mentioned also that the forecast os only valid when it if ti does not break the US$930 resistance level. However, the price broke the resistance and rallied to US$1,000.

Price made a pullback today, this time at price level near US$1,000. Price fell US$30 to close at US$963.20. The price rally upwards has formed an up trend channel defined by two parralel trend lines upwards. The bottom line forms the support level and the top line forms the resistance level.

When price was at $1,000, it was at the resistance level and now the market is reacting to this resistance level. The pull back is expected to last until the price finds support at $900, the trend line support level. The short term 30-day average is also at $900.

However, the pullback may be temporary as the momentum of the up trend is still strong. The Relative Strength Index (RSI) indicator is still in convergence with the up trend.


Daily Gold futures (CBOT) chart as at 24 February 2009 using NextVIEW Advisor. Click on chart for larger view.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.