Gold for Wednesday, February 25, 2015
For the last month now gold has drifted steadily lower down to a one month low near the key $1200 level before finding solid support at this key level over the last week. In the last 48 hours it has moved back and forth and teased the level a little however the demand has kicked in and brought it right back above the key $1200 level. A couple of weeks ago it rallied higher after dropping through $1220 before running into some resistance around the key $1240 level. The last month or so has now undone some great work earlier in the year which saw it surge to a five month high near $1308, before reversing and moving back to $1200. It presently finds itself trading in a narrow range right around $1200 where it is experiencing solid support. 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 fell to a seven-week low on Tuesday then pared losses after Federal Reserve Chair Janet Yellen said the central bank is preparing to consider interest rate hikes on a “meeting-by-meeting basis.” Yellen said the Fed’s rate-setting policy committee will likely first remove the word “patient” in describing its approach to rate hikes, then enter a phase in which rate hikes are possible at any meeting. Spot gold initially fell about 0.8 percent to a seven-week low of $1,190.91 per ounce as the U.S. dollar rose, then eased, down 0.1 percent to $1,199 an ounce. U.S. gold futures for April delivery settled down $3.50 an ounce at $1,197.30. “The initial negative was the shift in emphasis. Whereas the Fed’s last statement showed a fair (sized) bloc worried about raising rates prematurely, Yellen seemed to be laying the groundwork for an increase, at least in the first part of the testimony,” said Peter Buchanan, senior economist for CIBC World Markets in Toronto. Gold bulls apparently liked the assurances from Yellen that rate hikes could still be more than two meetings away, Buchanan said.
(Daily chart / 4 hourly chart below)
Gold February 24 at 22:20 GMT 1200.7 H: 1204.6 L: 1190.4
Gold Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1200 | 1170 | — | 1240 | 1300 | — |
During the early hours of the Asian trading session on Wednesday, Gold is enjoying solid support from the key $1200 level after finishing last week falling sharply. Current range: trading right around $1200.
Further levels in both directions:
• Below: 1200 and 1170.
• 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 below 70% as it has dropped sharply back to near $1200. The trader sentiment is in favour of long positions.
Economic Releases
- 00:00 AU Internet Skilled Vacancies (Jan)
- 00:30 AU Construction Work Done (Q4)
- 00:30 AU Wage Price Index (WPI) (Q4)
- 09:30 UK BBA Mortgage Approvals (Jan)
- 12:45 EU EU Publishes its Winter Economic Forecasts
- 15:00 US New Home Sales (Jan)