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GOLD rallies 3%, hitting its highest level in over two months at $1321.

Gold prices rocketed higher today as a mix of technical buying and short covering hit the market. The gold bulls are showing some real signs of life as the market reclaimed the psychologically important $1300 level. The U.S. dollar weakness today, along with the ongoing violence in Iraq and increasing tensions between Russia and Ukraine helped the bulls power through resistance.

The market was likely lined with buy stops above resistance as well which added fuel to the fire today. In addition to the geopolitical landscape, gold investors may have taken some comfort in yesterday's remarks by Fed Chairwoman Janet Yellen. Ms.Yellen indicated that the economy still needs the Fed's assistance. Although the Fed may continue to taper its asset purchases, interest rates are likely to stay low for the foreseeable future.

This could be potentially bullish for the precious metals markets and potentially bearish for the greenback. Crude oil prices are holding comfortably above the $100 per barrel mark, and should crude break above the $110 level we could see significantly higher oil prices in short order.This could also be another potentially bullish underlying factor for the gold market.

The next likely upside target for the gold bulls is around the $1331 area, or the April highs. A break above this level could potentially see gold prices targeting the mid $1350s in short order. Near term support in gold will now likely be seen at the $1309 area and then again at the $1300 level.

20 Jun 2014 | Categories: Gold

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