February gold futures on Wednesday morning hit a fresh two-month high of $871.30 an ounce. The recent sharp depreciation of the value of the U.S. dollar versus the other major currencies has been a bullish catalyst for the precious yellow metal. February gold is presently in a two-month-old uptrend from the October contract low of $688.00 an ounce. The next upside price objective for the resurgent gold market bulls is pushing and closing prices above solid overhead trend-line resistance at the $890.00 area.
click on the chart to enlarge
That downtrend line is still in place on the daily chart and is drawn from the July and October highs. Above that lies major psychological resistance at $900.00 an ounce and then solid technical resistance at the October high of $938.80. On the downside, chart support for February gold is located at $8.50 and then at Wednesday’s low of $847.20. Below that is located strong technical support at the $835.00 area. Major psychological support is then located at $800.00. Any corrective bounce in the value of the U.S. dollar would very likely find the gold market is a solid corrective pullback.–Stay tuned! Jim Wyckoff