Gold quickly gained traction following the surprise move from the Swiss National Bank, a trend likely to continue in the face of a European currency war.
The original break of the trendline I treated with suspicion because it was done with a lack of convincing momentum and was resting quietly below $1240 resistance. Following the carnage from SNB’s action yesterday I’ll admit the Gold upside now appears more convincing.
One of the reasons Gold is likely to have gained atraction (other than the safe-haven status) is that now SNB have reduced interest rates and removed the EURCHF floor it again raises the debate of whether they should hold more of their reserves in Gold.
It has broken above the $1240 resistance and also the October ’12 high. This makes the $1240-$1256 zone a potential buy area assuming we do see a retracement.
On W1 the next obvious levels to target would be $1300 and $1348.
On the Daily Chart we hover just above $1256 support (October high) which may provide an intraday buy opportunity for a trade to finish the week off with.
For those wanting to relax over the weekend and start afresh next week we could patiently wait to see if there is a sizeable retracement towards the $1240-$1256 support zone or the broken trendline.
I think it now goes without saying that the markets now await the ECB meeting on 22nd Jan which is likely to send further ripples through the markets, including Gold crosses.