December gold futures last Friday hit a fresh 17-month high of $776.90 an ounce. Trading has recently become a bit more volatile at higher price levels, but the steep uptrend line on the daily bar chart remains intact and the bulls still have the solid near-term technical advantage. The gold market bears would gain a bit of fresh downside near-term technical momentum by pushing and closing December futures prices below solid support at this week’s low of $749.00. Gold traders will continue to monitor the value of the U.S. dollar against the other major currencies very closely.
click on the chart to enlarge
It’s likely that the greenback and gold will trade in a more pronounced inverse relationship in the near term. Any strong rebound in the value of the U.S. dollar, as indicated by the U.S. dollar index, would put serious downside price pressure on gold futures. Gold traders will also monitor another key “outside market,” which is the crude oil market. Any bigger price moves in crude oil would likely find gold futures moving in the same direction as crude. Stay tuned!
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