HXPM Gold Weekly Gold Review 110620: Significant downturn in the stock market, gold gaining support from more capital inflows

Weekly Gold Review (2011.06.20):  http://www.hx9999.com/en/comment_week_785.html

Gold kept going up last week. The price rose from the lowest at 1,510.5 USD last Monday to the highest at 1,542, but the increase was less than 32 USD. The price on last Monday followed the downturn of the previous Friday, falling from the opening high level 1,530 to the big support level 1,510. Fortunately, there were buying orders in the low level which stopped the downtrend and the price rebounded afterwards. It rose to 1,537 last Tuesday, whereas the high level was 1,534.5 last Wednesday; then, it slightly retreated to 1533 on Thursday. The highest level in the week was 1,542 on Friday, with the closing price of 1,539.5.

This recovery of gold was a bit strange. The U.S. dollar last week was rising, and the dollar index rose over 76, which was the highest rebound since this month. Oil price declined due to the economic data and stock performance. The U.S. oil futures fell on the high level 99.3 USD/barrel on Monday. Oil price declined significantly on Wednesday, from the daily highest price 99.95 to the lowest 94, with nearly 5% decrease. It is rare to have such a large decline.

However, with more market capital inflows in the gold market, its price was not affected by the two bearish messages mentioned above, and even went up. Global stock markets fell significantly last week. Some of the stock market capitals flew into the gold market. In addition to the concern from Greece’s debt crisis at the beginning of the week, risk aversion supported the gold price.
Silver and gold price trends were somehow similar, which rebounded after a huge decline on Monday. The rise of silver was restricted by inadequate funds support. So, the rebound from last Tuesday to Friday was still unable to break through the high level of 36.3 USD on Monday. It closed at 35.85 on Friday.

Observed from the daily chart, the gold rose along a big support line, should be able to form a high price along this uptrend. On the other hand, the current price is closed to this support line. Once the bearish news releases, the gold will face a selling pressure and have chance to break through the support line. Hence a short-term retracement occurs. Volatility this week was estimated to repeat the pattern last week, but with higher level, between 1,515 to 1,555 USD.

Silver was also rising along the big support line. However, declining from the peak, the price has not been able to rebound and stabilize at 39 USD. So, the current support line is just a psychological support, which is not strong enough to form a technical rally in a short period of time. The trend this week was estimated between 34.50 and 36.50.