Gold – Remains Steady Around $1200

Gold for Friday, April 17, 2015

In the last week or so, gold has traded in a narrow range right around the key $1200 level where it presently sits.  It seems gold has an attraction to the key $1200 level as every time it ventures away it returns quickly to trade right around it. A couple of weeks ago gold sprung to life surging higher away from the key $1200 level back to a seven week high above $1220 before easing back and finding some support at the key $1200 level to finish out last week. A few weeks ago gold eased a little for a few days to below $1185, although for the best part of the last few weeks gold has moved strongly off the support at $1150 and then found some new support from the $1200 level. It still has its eyes firmly on the key $1200 level and it will be interesting to see whether it can remain above this level and continue to receive support. Prior to the recent move, gold remained quite steady enjoying strong support from the $1150 level whilst some eyes would have been looking lower. The next obvious technical support level lower 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 was played out a couple of weeks ago.

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. 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 prices slipped below $1,200 an ounce on Thursday, after rising earlier in the session on a softer dollar and weak data on U.S. industrial production.  Spot gold lost 0.5 percent to $1,195.10 an ounce, after climbing 0.7 percent on Wednesday.  Earlier, the precious metal got a boost as the dollar declined for a third straight session against a basket of major currencies on Thursday.  A weaker dollar makes gold cheaper for holders of other currencies, while also increasing the metal’s appeal as a hedge.  The dollar nursed modest losses against the yen and euro early, and suffered bigger falls versus commodity currencies led by the Canadian dollar.  Weakness in the greenback was also prompted by sluggish U.S. economic data released on Wednesday.  U.S. industrial output posted its biggest drop in more than 2-1/2 years in March in part as oil and gas well drilling plummeted, highlighting the negative impact of lower crude prices and a strong dollar on the economy.

(Daily chart / 4 hourly chart below)

Gold April 17 at 00:35 GMT   1198.6   H: 1209.3   L: 1194.8

Gold Technical

S3

S2

S1

R1

R2

R3

1200

1150

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1240

1300

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During the early hours of the Asian trading session on Friday, Gold is trading in a very narrow range above $1200. Current range: trading right below $1200.

Further levels in both directions:

• Below: 1200 and 1150.

• Above: 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 to below 65% as it has eased lower back to below $1200 after its recent surge higher to above $1220. The trader sentiment is in favour of long positions.

Economic Releases

05:00 JP Consumer Confidence (Mar)

08:00 EU Current Account (sa) (Feb)

08:30 UK Average Earnings (incl. bonus) (Feb)

08:30 UK Claimant Count (Mar)

08:30 UK ILO Unemployment Rate (Feb)

09:00 EU HICP (Mar)

12:30 CA CPI (Mar)

12:30 CA Retail Sales (Feb)

12:30 US CPI (Mar)

14:00 US Leading Indicator (Mar)

14:00 US Univ of Mich Sent. (Prelim.) (Apr)

US World Bank and IMF Spring Meeting

* All release times are GMT

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