Gold – Steadies Just Below $1280

Gold for Tuesday, January 20, 2015

Gold has enjoyed a solid last three weeks which culminated in the strong surge higher to a four month high above $1280 to close out last week.  To start this week it has just eased back a little and steadied below the $1280 level.  In the last three weeks is time it was able to rally strongly from around $1170 back through the key $1200 level and to a 12 week high just above the $1240 level over the last few days before its surge higher at the end of last week. Despite this 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 eased from four-month highs on Monday as investors cashed in some of last week’s hefty gains, though prices were still supported by wider market volatility that boosted the metal’s appeal as a haven from risk.  A market rout after Switzerland unexpectedly abandoned a cap on the franc last week triggered strong bids for gold, often seen as an alternative to risky assets, sending prices to their highest since September at $1,281.50.  While it edged back from that level on Monday, traders said that gold remained supported as the market braced for further volatility in a critical week for the euro zone.  Expectations are high that the European Central Bank will unveil a bond-buying stimulus package at a policy meeting on Thursday, while the anti-bailout party Syriza maintains a lead in the polls going into Greece’s general election on Sunday.

(Daily chart / 4 hourly chart below)

Gold January 19 at 23:05 GMT   1275.9   H: 1277.4   L: 1275.8

Gold Technical

S3

S2

S1

R1

R2

R3

1200

1170

1130

1280

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During the early hours of the Asian trading session on Tuesday, Gold is trading in a narrow range around $1280 after surging higher to a four week high above there to close out last week. Current range: trading right around $1280.

Further levels in both directions:

• Below: 1200, 1170 and 1130.

• Above: 1280.

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 four month high above $1280 in the last few days.  The trader sentiment is ever so slightly in favour of long positions.

Economic Releases

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

09:00 EU Trade Balance (Nov)

10:00 EU ZEW (Economic Sentiment) (Jan)

13:30 CA Manufacturing sales (Nov)

13:30 CA Wholesale Sales (Nov)

15:00 US NAHB Builders survey (Jan)

EU EU General Affairs Ministers Hold a Meeting in Brussels

JP BoJ Monetary Policy meeting (to 21st)

* 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.