Gold – Remains Steady Below $1270

Gold for Friday, February 6, 2015

Since the beginning of this year gold has enjoyed a very solid few weeks which has seen it surge to a five month high near $1308, before easing back over the last couple of weeks back down below $1260.  It presently finds itself trading in a narrow range around $1265.  A couple of 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. Over the last month gold has been on the move as 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 few 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 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 closed about $2 lower on Thursday as uncertainty in Greece after the European Central Bank said it would no longer accept Greek bonds in return for funding left investors on the sidelines.  The ECB’s announcement dealt a blow to Athens which is seeking debt relief from euro zone lenders, knocking the euro down against the dollar in early trade.  Spot gold was last down 0.5 percent to $1,264 an ounce. U.S. gold futures for April delivery settled down $1.80, at $1,262.70 an ounce.  “Like in 2014, we had a phenomenal start of the year, up 8 percent in January, so inevitably we are going to see a bit of profit-taking,” broker Sharps Pixley CEO Ross Norman said.  “We seem to be constantly relying on a new level of economic prices or another ‘Grexit’ story or euro deflation to get ourselves into a higher trading range and those things are difficult to predict.”  Bullion failed to capitalize on a fall in European equities, while it extended losses after an upbeat report on the labour market lifted U.S. stock prices.

(Daily chart / 4 hourly chart below)

Gold February 5 at 23:50 GMT   1265.9   H: 1268.1   L: 1263.9

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 Friday, Gold is trading in a very narrow range right around $1265. Current range: trading right below $1270 around $1265.

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 to 60% as it has eased back away from the five month high near $1300 in the last week or so. The trader sentiment is in favour of long positions.

Economic Releases

00:30 AU RBA statement on monetary policy

05:00 JP Leading indicator (Prelim.) (Dec)

09:30 UK Trade Balance (Non-EU) (Dec)

09:30 UK Visible Trade Balance (World) (Dec)

13:30 CA Building permits (Dec)

13:30 CA Unemployment (Jan)

13:30 US Non-farm & Private Payrolls (Jan)

13:30 US Unemployment (Jan)

20:00 US Consumer Credit (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.

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