Gold – Eases Back From $1300

Gold for Tuesday, January 27, 2015

Gold has enjoyed a very solid last few weeks as it has surged to a five month high near $1308, before easing back a little in the last few days.  To start last week it had just eased back a little and steadied below the $1280 level after surging to that area and a four month high recently.  In the last few weeks it has been able to rally strongly from around $1170 back through the key $1200 level and to a 12 week high just above the $1240 level before its further surge higher in the last couple of weeks.  Despite this recent break, the $1240 level remains key as it has provided plenty of resistance over the last few months and is now likely to play a role should gold retreat back to it. At the beginning of last month gold eased lower away from the resistance level at $1240 yet again back down to below $1200. During the second half of November gold made repeated runs at the resistance level at $1200 failing every time, before finally breaking through strongly.

Throughout the first half of 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.

Gold fell 1 percent on Monday as traders cashed in gains that took the metal to five-month highs last week, with the wider markets recovering ground lost after an anti-austerity party won elections in Greece.  Greek leftist leader Alexis Tsipras, whose Syriza party swept to victory in a snap election on Sunday, was set to become prime minister of the first euro zone government openly opposed to bailout conditions imposed by the European Union and International Monetary Fund during the economic crisis.  Greek stocks fell on the news, but European equities rose 0.2 percent, as the market focused on the positive impact of the European Central Bank’s bond-buying plan unveiled last week.  Spot gold was down 1 percent at $1,280 an ounce. U.S. gold futures for February delivery settled $13.21 lower, at $1,279.40 an ounce.  As far as the election was concerned, “the market expected what we got”, Saxo Bank’s head of research Ole Hansen said. Gold’s rise to its highest since mid-August last week left it overstretched, he said, and it gave back some of that ground once the uncertainty surrounding the election was resolved.

(Daily chart / 4 hourly chart below)

Gold January 26 at 23:00 GMT   1281.1   H: 1299.4   L: 1275.9

Gold Technical

S3

S2

S1

R1

R2

R3

1240

1200

1170

1300

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During the early hours of the Asian trading session on Tuesday, Gold is trading in a narrow range between $1280 and $1282 after easing back from the five month high near $1308. Current range: trading right above $1280 around $1282.

Further levels in both directions:

• Below: 1240, 1200 and 1170.

• Above: 1300.

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 well above 50% as it has eased back away from the five month high near $1300 in the last couple of days.  The trader sentiment is ever so slightly in favour of long positions.

Economic Releases

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

08:00 EU EU Finance Ministers Hold Meeting in Brussels

09:30 UK GDP (1st Est.) (Q4)

09:30 UK Index of Services (Nov)

13:30 US Durable goods (Dec)

14:00 US S&P Case-Shiller Home Price (Nov)

15:00 US Consumer Confidence (Jan)

15:00 US New Home Sales (Dec)

US Federal Reserve FOMC meeting (to 28th)

* 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.

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