Gold – Continues to Remain Steady Above Key $1200 Level

Gold for Friday, December 5, 2014

After finally making its way back to the key $1200 level, gold has spent the last few days trading in a narrow range under $1220.  In the last couple of weeks prior, gold made repeated runs at the resistance level at $1200 failing every time, which then resulted in gold falling sharply to start this week.  Since that time it has returned to back above $1220 and now is steady above it.  In the last week gold has reached a new one month high above $1220.  Over the last few days it has eased back and gravitated to the key $1200 level again. In the last few weeks Gold has 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 settled modestly lower on Thursday as the euro rebounded against the dollar after European Central Bank chief Mario Draghi said the bank would reevaluate the case for more stimulus next year, but remained under pressure ahead of key U.S. data on Friday.  Strength in the U.S. currency makes dollar-denominated gold more expensive for holders of other currencies.  Investors had been looking for a clear sign from Draghi that the ECB was heading for a move into the sort of outright printing of money, or quantitative easing, carried out by other central banks in recent years.  Spot gold was last at $1,206.87 an ounce, down 0.2 percent but off an earlier low of $1,201.07, while U.S. gold futures for December settled down $1.00 at $1,207.70. The euro bounced from a 28-month low to rise 0.3 percent.  Uncertainty ahead of a key reading of U.S. non-farm payrolls on Friday and caution after wide swings in gold prices on Monday limited the rise and kept prices from building on gains, traders said.

(Daily chart / 4 hourly chart below)

Gold December 4 at 22:25 GMT   1205.6   H: 1206.1   L: 1204.4

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 Friday, Gold is trading in a narrow range right around $1205 after easing back over the last few  days.  Current range: trading right around $1205.

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 above 50% again as gold has eased back to the key $1200 level. The trader sentiment is ever so slightly in favour of long positions.

Economic Releases

05:00 JP Leading indicator (Prelim.) (Oct)

13:30 CA Unemployment (Nov)

13:30 CA Labour Productivity (Q3)

13:30 CA Merchandise Trade (Oct)

13:30 US Non-farm & Private Payrolls (Nov)

13:30 US Unemployment (Nov)

13:30 US Trade Balance (Oct)

15:00 US Factory Orders (Oct)

20:00 US Consumer Credit (Oct)

* All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.