Gold hits four month high but remains vunerable

Gold elevated on geopolitical tension while prices reach key resistance

Bullion.Directory precious metals analysis 11 July, 2014
By Christopher Lemieux
Senior FX and Commodities Analyst at FX Analytics

Precious metals received safe-haven demand after Portuguese bank Banco Espirito Santo SA debt hit record levels after debt payments were delayed on short-term obligations, which worried market participants that the eurozone’s financial woes are far from behind it.

The brewing conflict between Israel and Hamas stoked further demand, as nearly 50 percent of Israelis are seeking protection in bomb shelters after Hamas has continuously fire missiles into Israel over the last couple days. There is a potential for Israel to mobilize ground troops into the Gaza strip.

Futures are reaching levels not seen since Russia began its invasion into the former-Ukrainian peninsula of Crimea.

Price action was rejected off key resistance of $1,347.1 per troy ounce, or the 78.6 percent Fibonacci retracement level from yearly high-to-low.

Prices are technically overbought, with the RSI above 73.

The inability to overtake current resistance would give traders opportunity for profit taking.

A pullback to support levels of $1,333 is probable – however, continued geopolitical conflict should get gold prices supported.

A break above current resistance levels would trigger prices to extend to $1,360 per ounce before attempting to test $1,374.

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