Gold – Continues to Gravitate Around $1200

Gold for Tuesday, December 9, 2014

Gold has had a fascination with the $1200 level over the last few weeks which has seen it trade either side of this level.  In the last 24 hours it has again surged back above it to be presently just trading above.  Over the last week gold traded in a narrow range under $1220 before falling sharply back below to close out last week. In the few weeks prior, gold made repeated runs at the resistance level at $1200 failing every time. Since that time it has returned to back above $1220 before easing lower. Early last week gold reached a new one month high above $1220. Then for the rest of the week gold eased back and gravitated to the key $1200 level again. Throughout November Gold enjoyed a strong resurgence back to the key $1200 level where it has met stiff resistance up until recently.

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 spent a few days consolidating around $1160 after the strong fall which has allowed it to rally higher in the last couple of weeks. 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. 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. 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 jumped more than 1 percent on Monday on a brief surge of late-day technical buying as it breached the $1,200-per-ounce level long after the U.S. dollar dropped from a more than five-year high.  Spot gold was up 1 percent at $1,203.51 an ounce after briefly rising to $1,208.19. The metal lost 1.1 percent on Friday when U.S. data showed employers added the largest number of workers in nearly three years in November and that wages picked up.  U.S. gold futures for February delivery rose 0.4 percent to settle at $1,194.90 an ounce.  “This is all technical buying … $1,200 is the line in the sand right now,” said Eli Tesfaye, senior market strategist for RJO Futures in Chicago.  “Every time the market gets close to $1,200, you get a little bit of buying interest.”  The U.S. dollar traded close to its highest since March 2009 on the back of the strong jobs report but turned lower later in the session.

(Daily chart / 4 hourly chart below)

Gold December 8 at 22:35 GMT   1203.3   H: 1204.2   L: 1202.7

Gold Technical

S3

S2

S1

R1

R2

R3

1130

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1200

1255

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During the early hours of the Asian trading session on Tuesday, Gold is just starting to ease back to the key $1200 level again after surging higher towards $1210.  Current range: trading just below $1204.

Further levels in both directions:

• Below: 1130.

• 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 moved back up towards 55% again as gold has gravitated back to the key $1200 level again.  The trader sentiment is ever so slightly in favour of long positions.

Economic Releases

23:30 (Mon) AU Westpac Consumer Confidence (Dec)

23:50 (Mon) JP CGPI (Nov)

00:30 AU NAB Business Conditions & Confidence (Nov)

07:00 EU EU Finance Ministers Hold Meeting in Brussels

09:30 UK Industrial & Manufacturing Production (Oct)

15:00 UK NIESR GDP Est. (Nov)

15:00 US IBD Consumer Optimism (Dec)

15:00 US Wholesale Inventories (Oct)

* All release times are GMT

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