Gold retreated below support at $1200/ounce. Follow-through below $1180 would indicate another test of primary support at $1140/$1150. Breakout above $1220/ounce is now unlikely. A 13-week Twiggs Momentum peak below zero warns of a primary down-trend. Breach of primary support would signal a decline to $1000/ounce.
* Target calculation: 1200 – ( 1400 – 1200 ) = 1000
What impact do you think that the Greece situation, possibly leaving the Euro will have on the gold price?
Rising uncertainty increases safe haven demand. But turmoil in Greece or elsewhere tends to be secondary in nature. The primary trend is determined by the long-term inflation outlook and interest rates. When inflation is expected to remain low, demand for gold as a store of value falls. Rising interest rates still appear some way off, but would increase the opportunity cost of holding gold, further reducing demand.
Also, Greece may well default, but this does not necessarily mean it will leave the EMU.