Gold experienced a strong move higher today as news filtered out over S&P’s downgrade to the US credit outlook.
As mentioned in my last Friday radio interview with Eric King on the Weekly Metals Wrap, I did not expect it to breach this level on its first approach. This level has as much significance as $1,000 in the sense that it is psychologically significant. There are traders who had $1500 as an initial target for this leg and it is normal to see them booking profits on the first approach. A setback therefore would not be expected. There are several levels on the chart that should provide some downside technical support should this occur.
If, on the other hand, gold goes right through $1500 without so much as pausing, it will indicate that its price is about to accelerate sharply higher.