Gold – Starts the Week Lower Near $1280

Gold for Monday, February 2, 2015

Gold enjoyed a very solid few weeks which saw it surge to a five month high near $1308, before easing back over the last week or so back down to near $1250.  It has since rallied and is presently trading right around $1280.  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 steadied above $1,280 an ounce on Monday after posting its biggest monthly gain in three years in the prior session following weaker-than-expected U.S. economic growth in the fourth quarter.  Bullion is likely to maintain its safe-haven appeal amid renewed concerns over the global economy with data showing China’s factory sector shrinking for the first time since 2012.  Spot gold was off 0.2 percent at $1,280.77 an ounce by 0036 GMT after rising 2 percent on Friday. It ended January with a gain of 8.4 percent, its largest monthly increase since January 2012.  U.S. gold for April delivery rose 0.2 percent to $1,281.60 an ounce.  U.S. economic growth slowed to a 2.6 percent annual pace from a 5 percent rate in the third quarter as weak business spending and a wider trade deficit offset the fastest pace of consumer spending since 2006.  China’s factory sector unexpectedly shrank for the first time in nearly 2-1/2 years in January and firms see more gloom ahead, raising expectations that policymakers will take more action to forestall a sharper slowdown.

(Daily chart / 4 hourly chart below)

Gold February 2 at 02:45 GMT   1279.5   H: 1283.9   L: 1278.9

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 Monday, Gold is easing back to the $1280 level which provided some resistance a couple of weeks ago.  Current range: trading right above $1280.

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 well above 50% as it has eased back away from the five month high near $1300 in the last few days. The trader sentiment is ever so slightly in favour of long positions.

Economic Releases

09:00 EU Manufacturing PMI (Jan)

09:30 UK CIPS/Markit Manufacturing PMI (Jan)

13:30 US Core PCE Price Index (Dec)

13:30 US Personal income & spending (Dec)

14:45 US Manufacturing PMI (Jan)

15:00 US Construction Spending (Dec)

15:00 US ISM Manufacturing (Jan)

* All release times are GMT

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