Midweek Report 4 December

Gold
Gold started this week positively, closing above the 1230 resistance yesterday. The buying has continued in early trading today posting a high thus far at 1238. This is an important level that has been in focus for several weeks. The 38.2 Fibonacci retracement level is often seen as the point that dictates if the market is witnessing a healthy bounce or something more. 1238 is the 38.2 % correction of the selling that began last April (arrowed on the chart). Gold has marginally moved through this price level on a couple of occasions recently but, it requires a close above this point to confirm the technical signal indicating potential for further gains. 1230 now switches to the support column and should the market remain above this point, then the Bulls retain control.

Currencies
GBPUSD has been under pressure recently and yesterday posted a low of 1.2698. This was marginally above the last dip at 1.2693 from 30th October. On that occasion, there was a significant bounce as rhetoric regarding Brexit provided a positive slant. Since then the news has been less encouraging and sellers have returned to this market. Although currently at potentially dangerous levels, the key support remains the low from the 15th August at 1.2661. If the Bulls can defend this level then it may stabilise. A failure to do so could see stop activity and fresh selling from the Bears as they gain in confidence. The daily chart below clearly demonstrates why traders take notice of the 38.2 Fibonacci level.

VIBHS Financial Review