GOLD (Futures) - We saw a second week of downside losses the past week as Gold continues to weaken following its rejection of higher prices at the 1,161.88 level in early Jan'10. The commodity should head further lower while holding on its current bearish bias and target its Dec 22'09 low at 1,074.55 with a turn below there eyeing further declines towards its longer term rising trendline currently at 1,061.63. We envisage a combination of these two levels should turn off the commodity on initial test and possibly generate a corrective recovery. However, the technical implications of a failure of that zone will be, firstly, a break and hold below the 1,074.55 swing low will put the commodity in a newly defined downtrend with a pattern of lower highs and lower lows and secondly, stronger supports at the 1,030.85/1,026.55 levels, its Mar'08 high/Oct 28'09 low will be targeted. Losses of these levels if seen will then create additional weakness towards its Oct 02'09 low at 986.67. Its weekly RSI remains clearly pointed to the downside suggesting further weakness. Conversely, if its rejection candle printed on the daily chart on Friday gets a further push to the upside, we could see the 1,118.35 level, its Jan 13'10 low targeted ahead of the 1,168 level, its Dec 08'09 high. This level must give way for its present downside pressure to be reduced thereby bringing further strength towards the 1,200 level and next the 1,226.37 level, its 2009 high.

Market Analyst
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