Gold – Steadies Below Resistance of $1240 Around $1225

Gold for Friday, December 12, 2014

After surging so well a couple of days ago Gold has been content to consolidate and just slowly ease away from the resistance level at $1240 over the last day or so. Gold enjoyed a solid surge higher up from the key $1200 level to a new six week high just shy of a previous resistance level at $1240 in recent days. Gold has had a fascination with the $1200 level over the last few weeks which has seen it trade either side of this level. 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 then 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 prices were little changed on Thursday, retreating further from the previous session’s seven-week high as the dollar extended gains after U.S. data pointed to a strengthening economy.  The number of Americans filing new claims for unemployment benefits fell last week, while U.S. consumer spending advanced at a brisk clip in November.  Spot gold was up 0.1 percent to $1,228 an ounce. The metal rose to a seven-week high of $1,238.20 on Wednesday, before giving up gains on steadier equity markets.  Gold was still on track for a 2.6 percent weekly gain so far, the biggest since mid-October, as it benefited from a pullback in the dollar over the past few sessions.  The dollar was up 0.4 percent against a basket of currencies and was expected to firm further ahead of the U.S. Federal Reserve’s policy meeting next week, which could give cues on the timing of the central bank’s interest rates hikes.

(Daily chart / 4 hourly chart below)

Gold December 11 at 20:45 GMT   1224.1   H: 1232.9   L: 1216.1

Gold Technical

S3

S2

S1

R1

R2

R3

1130

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1240

1255

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During the early hours of the Asian trading session on Friday, Gold is consolidating just below $1230 after easing back away from the resistance level at $1240 over the last couple of days.  Current range: trading around $1225.

Further levels in both directions:

• Below: 1130.

• Above: 1240 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 eased lower again.  The trader sentiment is ever so slightly in favour of long positions.

Economic Releases

04:30 JP Capacity Utilisation (Oct)

04:30 JP Industrial Production (Final) (Oct)

09:30 UK Construction Output (sa) (Oct)

10:00 EU Industrial production (Oct)

11:00 UK CBI Distributive Trades (12th-20th) (Dec)

13:30 US PPI (Nov)

14:55 US Univ of Mich Sent. (Prelim.) (Dec)

WLD IEA Monthly Oil Market Report

* All release times are GMT

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