GOLD weakened further in Asian trade today but managed to hold up very well in the face of further USD buying on the day. A cut in the benchmark rate in Australia by 0.25% and a fall in China’s Manufacturing PMI added to downside pressure in commodity markets on the day. Gold finished well off the session lows at $1,717. We saw some minor upside pressure return for Gold today as negative sentiment starts to shift back into equity and currency markets which is driving demand related commodities lower and adding support to precious metals. Even though Gold did fall on the day it was well supported as buyers start to look for safety assets again as MF Global files for bankruptcy and some investors are worried about the potential contagion of such an event. We now expect any further losses to be limited by support at $1,695 and for buyers to reemerge as equities remain pressured. We set buy orders at the level with stops down at $1,630 to start. On the topside, a break above resistance at $1,727 may signal a bottom is now in place and we can move higher to re-test $1,750 again. A break here an we get long in a big way but we prefer to buy dips rather than breaks higher for now.
Compass Direction
Short-Term Medium-Term
NEUTRAL BULLISH
| $1,695 | $1,706/08 | $1,717 | $1,727 | $1,737/38 | $1,750 |
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