New Record High for Gold; Targeting $1,471.00

Spot gold rallied over 1.00 percent to a new all-time high at $1,450.50 in New York on multiple stories of global uncertainty. In Europe, concerns grew regarding the effects that the European Central Bank’s potential rate hike will have on indebted countries. In the U.S., the dollar is weaker and White House meetings have yet to reach a new agreement on the budget. In Libya, rebels square off for the town of Brega to forces loyal to Moammar Gadhafi.

With heightened uncertainty in the world markets, the precious metal resumed its long term bullish trend and broke above critical resistance level of $1,440. The bullish break out could continue if we see a close above the $1,450.00 level. Immediate upside resistance will be the $1,462.10 level which is the 127.2% expansion level of the March 7th high to March 15th low move. Further upside could target the 161.8% expansion level at $1,471.20.

It is around the $1,471 area that gold could experience a bearish reversal or temporary pullback. If the bullish trend ignores this potential reversal and closes above $1,484.30, a continued run to $1,500.00 could happen. The following outline the legs of the potential bearish butterfly pattern:

X to A targets point D with a 141.4% expansion level

A to B confirms point C with a 50.0% retracement

B to C targets point D with a 161.8% expansion level

If valid, after reaching the $1,471.00 area, gold prices could pullback towards the $1,455 area before any further bullishness resumes.

Euro to 1.4224, yen at 84.61, sterling at 1.6287.