Gold – Enjoys Strong Rally Back to Key $1200 Level

Gold for Wednesday, November 19, 2014

In the last week or so Gold has enjoyed a strong resurgence back to the key $1200 level where it has met stiff resistance.   Throughout the second half of October gold fell very strongly and resumed the medium term down trend falling from above $1250 back down through the key $1240 level, down below $1200 to a multi year low near $1130.  It spend a few days consolidating around $1160 after the strong fall which has allowed it to rally higher in the last week.   Earlier in October Gold ran into the previous key level at $1240, however it also managed to surge higher to a five week high at $1255.

As to be expected, the key $1200 level is likely to play a role and provide reasonable resistance.  In late August Gold enjoyed a resurgence as it moved strongly higher off the support level at $1275, however it then ran into resistance at $1290. In the week prior, Gold had been falling lower back towards the medium term support level at $1290 however to finish out last week it fell sharply down to the previous key level at $1275. During the second half of June, gold steadily moved higher but showed numerous incidents of indecision with its multiple doji candlestick patterns on the daily chart, around $1320 and $1330. The OANDA long position ratio for Gold has eased back to 60% as gold has surged higher back to $1200.

At the beginning of June, gold did very well to repair some damage and return to the key $1275 level, then it has continued the momentum pushing a higher to its recent four month high. After moving so little for an extended period, gold dropped sharply back in May from above the well established support level at $1275 as it completely shattered this level falling to a four month low around $1240. It remained around support at $1240 for several days before its strong rally higher. It pushed down towards $1280 before sling shotting back and also had an excursion above $1300 for a short period before moving quickly back to the $1293 area again.

Gold prices settled higher on Tuesday as the dollar softened against the euro due partly to better-than-expected German economic data.  U.S. gold futures ended 1.1 percent higher at $1,197.10 an ounce, the highest close since since Oct. 30. Spot gold was last up 0.8 percent at $1,196 an ounce, slightly off an earlier high of $1,204.70.  The metal has rebounded about 6 percent from a 4-1/2-year low of $1,131.85 hit on Nov. 7.  “Gold is finding more strength after we broke the $1,180 resistance level from the fact that the dollar’s rally has stalled,” said ActivTrades senior analyst Carlo Alberto de Casa. “$1,250 is going to be a very important resistance area.”  The dollar slipped 0.4 percent against a basket of major currencies, mostly due to a stronger euro after the ZEW survey showed German economic sentiment rose in November for the first time in almost a year, beating expectations and raising hopes of an improvement in Europe’s biggest economy.

(Daily chart / 4 hourly chart below)

Gold November 18 at 22:40 GMT   1196.9   H: 1204.6   L: 1183.5

Gold Technical

S3

S2

S1

R1

R2

R3

1140

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—

1200

1255

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During the early hours of the Asian trading session on Wednesday, Gold is trading in narrow range between $1195 and $1200 after surging higher over the last week.  Current range: trading right around $1200.

Further levels in both directions:

• Below: 1140.

• Above: 1200 and 1255.

OANDA’s Open Position Ratios

(Shows the ratio of long vs. short positions held for Gold among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for Gold has eased back towards 60% as gold has done well to rally strongly back up to $1200. The trader sentiment is strongly in favour of long positions.

Economic Releases

23:50 (Tue) JP Customs Cleared Trade (Oct)

00:00 AU Internet Skilled Vacancies (Oct)

04:30 JP All Industry activity index (Sep)

05:00 JP Leading indicator (Final) (Sep)

09:00 EU Current Account (sa) (Sep)

09:30 UK BoE MPC minutes released

13:30 US Building Permits (Oct)

13:30 US Housing Starts (Oct)

19:00 US Fed releases minutes from prior (Oct 28-29) FOMC meeting

EU EBA Management Board Meeting

EU ECB Governing Council hold non-rate setting meeting

* All release times are GMT

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