Gold – Surges to Five Month High Just Shy of $1300

Gold for Wednesday, January 21, 2015

Gold has enjoyed a very solid last few weeks which has continued in the last 24 hours it has surged to a five month high just shy of $1300.  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 rose more than 1 percent on Tuesday to a 4-1/2 month high as uncertainty over the extent of a stimulus program the European Central Bank is expected to unveil on Thursday drove investors into assets seen as lower risk.  Buying accelerated on a break of the previous day’s high, dealers said, as stops were triggered, taking the metal to a session high of $1,294.10 an ounce.  U.S. gold futures for February delivery settled up 1.4 percent, at $1,294.20 an ounce. The metal has gained for seven sessions of consecutive. It has increased about 7 percent during that period, its strongest seven-day run since September 2007.  Spot gold was last up 1.2 percent at $1,292 an ounce.  Jittery financial markets are focused on Thursday’s ECB meeting, at which the bank is widely expected to unveil a quantitative easing program, and a Greek election on Sunday, which polls suggest anti-bailout party Syriza will win.

(Daily chart / 4 hourly chart below)

Gold January 20 at 22:45 GMT   1294.1   H: 1297.2   L: 1274.1

Gold Technical

S3

S2

S1

R1

R2

R3

1200

1170

1130

1300

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During the early hours of the Asian trading session on Wednesday, Gold is trading in a narrow range around $1295 after surging higher to a five month high above there in the last 24 hours.  Current range: trading right around $1295.

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 day. The trader sentiment is ever so slightly in favour of long positions.

Economic Releases

04:30 JP All Industry activity index (Nov)

05:00 JP Leading indicator (Final) (Nov)

09:30 UK Average Earnings (incl. bonus) (Nov)

09:30 UK Claimant Count (Dec)

09:30 UK ILO Unemployment Rate (Nov)

09:30 UK BoE MPC minutes released

13:30 US Building Permits (Dec)

13:30 US Housing Starts (Dec)

15:00 CA BoC – Overnight Rate

CA BoC interest rate announcement and Monetary Policy Report

JP BoJ MPC – Overnight Rate

JP BoJ Publish Interim Assessment

* All release times are GMT

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