Gold Prices Technical Analysis for July 25 2011

Gold Prices Technical Analysis for July 25 2011 : The gold markets rose on Friday, continuing the recent range bound conditions that revolve around the $1,600 mark. The truth is that this market is pretty overbought, and the traders seem to be taking a break. There is massive headline risk in this market as every time the news out of D.C. suggests that the US government can reach a deal on the debt ceiling, the market sells off. The reality is that there is a good chance there will be an agreement, and the market will sell off. Once that happens, we are probably going to be presented with a buying opportunity. Until then this market is going to be hectic.

Gold prices rose on Friday, as despite a European agreement to help Greece with its swelling debt problem, yet investors were still concerned that the European debt crisis will continue to spread across the region, as traders fear more prominent nations in the Euro Zone area will face similar difficulties including Italy and Spain, the Euro Zone’s third and fourth largest economies respectively.
Earlier on Friday optimism was the dominant theme among traders, however, doubts started to resurface again over the outlook of the European debt crisis, while news that U.S. lawmakers are close to agreeing a deal to raise the debt ceiling did little to calm traders, as they continued to target lower yielding and safe assets, which boosted demand on gold, and pushed prices above $1600 an ounce.

Economic fundamentals will be absent from markets on Monday , and accordingly, we shouldn’t expect strong movements, and that means that gold prices will trade within a limited range, albeit with an upside bias, especially if U.S. lawmakers fail to reach an agreement over the weekend, however, an agreement to raise the debt ceiling could send gold prices lower, since demand for safe assets including gold will drop, and that will push gold prices lower. (source CommoditiesMansion.com )