Gold – Remains Steady at One Month Low Around $1220

Gold for Friday, February 13, 2015

Over the course of the last three weeks gold has drifted steadily lower down to a one month low around $1220 where it is presently consolidating.  To start this week it has rallied a little higher and spent a couple of days consolidating around the key $1240 level before falling sharply over the last 48 hours down to a one month low below $1220.  To close out last week, gold moved sharply lower back to the key $1240 level and then to a three week low just below $1230.  With the exception of the last few weeks, gold has enjoyed a very solid few weeks to start the year which has seen it surge to a five month high near $1308, before reversing and moving back under $1240 over the last couple of weeks. It presently finds itself trading in a narrow range right around $1240. A few weeks ago gold eased back a little and steadied below the $1280 level after surging to that area and a four month high, before its recent strong surge higher.

At the beginning of December 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 on Thursday, lifting from a five-week low hit in earlier trade, helped by a lower dollar, Sweden’s surprise decision to launch monetary stimulus and heightened uncertainty over Greece’s debt.  Spot gold fell to its lowest since Jan. 9 at $1,216.45 an ounce, before recovering to trade up 0.3 percent at $1,223 per ounce. U.S. gold for April delivery edged up 0.2 percent at $1,222 an ounce.  “The only thing that is pushing up gold a little bit is the lower dollar after the BoJ media report and also the Riksbank’s aggressive monetary action,” ABN Amro analyst Georgette Boele said.  Sweden’s Riksbank cut its key repo rate into negative territory and said it would soon make purchases of government bonds with maturities from one year up to around five years for a sum of 10 billion Swedish crowns.  Gold lost 1.2 percent on Wednesday when the dollar hit a three-week peak against a basket of major currencies. It fell as much as 1 percent versus the yen on Thursday on a media report that more monetary stimulus from the Bank of Japan (BoJ) would be counterproductive.

(Daily chart / 4 hourly chart below)

Gold February 12 at 22:45 GMT   1222.1   H: 1233.3   L: 1216.9

Gold Technical

S3

S2

S1

R1

R2

R3

1200

1170

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1300

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During the early hours of the Asian trading session on Friday, Gold is trading in a narrow range right above $1220 after remaining quite steady over the last 24 hours or so.  Current range: trading right above $1220 around $1222.

Further levels in both directions:

• Below: 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 above 60% as it has eased back below $1240. The trader sentiment is in favour of long positions.

Economic Releases

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

10:00 EU GDP (1st Est.) (Q4)

10:00 EU Trade Balance (sa) (Dec)

13:30 CA Manufacturing sales (Dec)

13:30 US Import Price Index (Jan)

15:00 US Univ of Mich Sent. (Prelim.) (Feb)

* All release times are GMT

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