GOLD TODAY – Knee-jerk reactions but market bullish on net

Short Term: Medium Term: Long Term: Resistances: R1 1275 20 DMA R2 1301 Break down level R3 1303.80 May high R4 1344 Top of triangle R5 1359 Brexit-day peak R6 1375.25 High so far R7 1388 HRL R8 1434 Aug 2013 high Support: S1 1359 Previous peak S2 1310.65 July low S3 1302.55 Sep 1 support S4 1300 SL S5 1275 20 DMA S6 1249 38.2% Fibo S7 1240.15 Oct 7 low S8 1230 Triangle target S9 1199.85 May low S10 1046.40 Dec low Stochastics:Bearish Legend: R/SL= Resistance/support line HRL = horizontal resistance line UTL = Uptrend line BB = Bollinger band Fibo = Fibonacci retracement line H&S = Head-and-shouder pattern Technical Comment Analysis Spot gold prices spiked as high as $1,337.50 per oz this morning, breaching the RL off the July high, but they have since slipped back to around $1,300 per oz. Prices seem to have put in a base early in October and are now working higher. We see $1,300 per oz as the line in the sand between being bullish and being in consolidation mode. This dividing line originates from former support from July to September running from $1,310 to $1,300 per oz. For now we would look for consolidation either side of $1,300 per oz. Macro picture There has been another upset on the political front with Donald Trump winning the US presidential election. Gold prices lost ground on Tuesday November 8 when it looked as though Hillary Clinton would win but all changed once the votes started to come in. Gold prices rebounded to $1,337.50 per oz from lows around $1,268.95 per oz, a move of $68.55. Some had forecast a Trump win would lead to a $100 per oz move; others a rise to $1,400 per oz. The fact prices have retreated to $1,300 per oz suggests the market has perhaps learnt a lesson from the Brexit vote that knee-jerk reactions can be short-lived. Still, Trump’s shock win may well lead to some trend changes over the longer term. Talk of the US now spending its way to make the country great again could be seen as inflationary; amid all the other uncertainty, we expect this to be bullish for gold. Conclusion As we said yesterday, gold was likely to trade erratically until the outcome of the US election. Once prices adjust to the result, our base line is that the bull market will continue. We stick with this view although we would now be more bullish than we were. All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

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