Gold – Remains Steady Around $1170

Gold for Friday, March 20, 2015

Over the last couple of days gold has finally shown some life and reversed by moving strongly off the support at $1150 up to a two week high above $1170.  Prior to the recent move, gold remained quite steady enjoying support from the $1150 level whilst some eyes would have been looking lower.  The next obvious technical support level is around $1130, and if it was to move through this level, then it would be trading at multi-year lows and looking very bearish. When gold broke through the rock solid support level at $1200 recently, it opened itself up to some potential downside which has been played out in the last week or so. Throughout the second half of February gold enjoyed rock solid support from the key $1200 level which held it up on numerous occasions. For about a month gold drifted steadily lower down to a one month low near the key $1200 level before finding the solid support at this key level.

Gold has now undone all of its great work from earlier in the year which saw it surge to a five month high near $1308, before reversing and moving back to $1150. 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 posted its biggest daily percentage gain since Jan. 30 on Thursday following a more cautious than expected interest rate statement from the U.S. Federal Reserve.  U.S. gold futures for April delivery closed 1.5 percent higher at $1,169 an ounce, its highest settle since March 5.  Spot gold rallied to a peak of $1,177.46 an ounce earlier in the session and the dollar tumbled after the U.S. Federal Reserve signalled a slower pace of interest rate hikes and gave a cautious outlook for the U.S. economy.  Gold failed to maintain those gains, however, as the dollar recovered from an early low to rise 0.6 percent against a currency basket. The U.S. unit extended gains after jobless data indicated the American labor market remained on a solid footing despite slowing economic growth.  Spot gold was up 0.2 percent at $1,169 an ounce.  Gold hit a four-month low this week and remains down nearly 2 percent on the year on expectations that higher interest rates could lift the opportunity cost of holding non-yielding bullion.

(Daily chart / 4 hourly chart below)

Gold March 20 at 00:30 GMT   1170.1   H: 1172.9   L: 1170.1

Gold Technical

S3

S2

S1

R1

R2

R3

1150

—

—

1200

1240

1300

During the early hours of the Asian trading session on Friday, Gold is trading in a narrow range right around $1170 after spending the last couple of days trading moving strongly off support at $1150.  Current range: trading right above $1170.

Further levels in both directions:

• Below: 1150.

• Above: 1200, 1240 and 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 below 70% as it rallied and steadied around $1170. The trader sentiment is in favour of long positions.

Economic Releases

09:00 EU Current Account (sa) (Jan)

09:30 UK Public Borrowing (PSNB ex banks) (Feb)

12:30 CA CPI (Feb)

12:30 CA Retail Sales (Jan)

JP BoJ release minutes

* 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.