After a month of trading sideways in April, Gold finally managed to break out of its range between its 50 and 200 day moving averages and head back towards the highs posted earlier this year.
It has been somewhat of a relentless grind and a little choppy, but the major support around the $855 area has so far resisted any push to lower levels.
All the while equity markets have also been finding higher levels which have been contrary to what happened at the start of 2009, where Gold rose as equity markets fell.
The recent concern about the levels of UK and US debt amid speculation about possible ratings downgrades of these economies by the ratings agencies, has significantly boosted Gold over the past week.
After breaking above the $920 channel resistance and 50 day moving average, Gold has managed to kick on, and is now testing the March highs of $960 posted after the Fed announced its “QE” program.
The AMEX Gold Bugs index has also pushed higher, and is trading at its highest level since August last year.
The remaining commodity indices continue to give conflicting signals with the Reuters CRB index being unable to sustain any gains above the key 246 resistance level, as base metals prices continue to struggle at the upper ends of their recent ranges.
On the other hand the GSCI (Goldman Sachs Commodity Index) continues to move steadily higher, though this index does have a higher Oil component than its compatriot which would explain the difference.
The next key resistance levels for Gold are at $960 and behind that the key $1,000 level that has so far capped the up side.
However, with prospects as they are, it is becoming apparent that it is a matter of when, and not if, we look to test $1,000 again.
