Gold – Remains Steady Above $1300

Gold for Friday, January 23, 2015

Gold has enjoyed a very solid last few weeks which has continued in the last few days as it has surged to a five month high near $1308, before easing back a little in the last half day.  To start this week it has 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 week. 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 erased earlier losses on Thursday after the European Central Bank launched a multi-billion euro bond-buying program aimed at reviving a sagging euro zone economy.  President Mario Draghi said the ECB would print money to buy up 60 billion euros ($69 billion) worth of sovereign bonds a month in the euro zone, where inflation at minus 0.2 percent is far below the central bank’s target of just under 2 percent.  He said inflation was expected to increase gradually later in 2015 and in 2016 as the ECB’s monetary policy measures support demand and assuming a gradual increase in oil prices.  Gold is usually seen as a hedge against inflationary concerns.  “Gold is reacting to what Draghi has to say, to the bigger package that was announced and to rebounding inflation expectations in the euro zone,” ABN Amro analyst Georgette Boele said.

(Daily chart / 4 hourly chart below)

Gold January 23 at 00:35 GMT   1300.6   H: 1307.8   L: 1279.3

Gold Technical

S3

S2

S1

R1

R2

R3

1200

1170

1130

1300

—

—

During the early hours of the Asian trading session on Friday, Gold is trading in a narrow range between $1300 and $1304 after easing back from the five month high near $1308.  Current range: trading right above $1300 around $1301.

Further levels in both directions:

• Below: 1200, 1170 and 1130.

• 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 above 50% as it has surged to a 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

09:30 UK Retail Sales (Dec)

11:00 UK CBI Distributive Trades (23rd-27th) (Jan)

13:30 CA CPI (Dec)

13:30 CA Retail Sales (Nov)

15:00 US Existing home sales (Dec)

15:00 US Leading Indicator (Dec)

* 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.