Gold for Thursday, September 18, 2014
After finding some support around $1225 for a few days to start this week which saw it rally back close to $1240, gold has now fallen sharply to its lowest level since January this year. The next obvious level of potential support is at $1200 which is a long term key level. If gold was to fail at this level, then it is likely the flood gates will open and the shine will have definitely worn off. A few weeks ago gold was enjoying 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. Over the last month or so the $1290 level has shown some signs of support and held gold up until its recent sharp decline. During the second half of June, gold steadily moved higher but showed numerous incidents of indecision with its multiple doji candlestick patterns on the daily chart. This happened around $1320 and $1330.
The OANDA long position ratio for gold has increased a little to near 75% as gold has fallen sharply back below $1220. At the beginning of June, gold did very well to repair some damage and return to the key $1275 level, then it has continued the momentum pushing a higher to its recent four month high. After moving so little for an extended period, gold dropped sharply back in May from above the well established support level at $1275 as it completely shattered this level falling to a four month low around $1240. It remained around support at $1240 for several days before its strong rally higher. It pushed down towards $1280 before sling shotting back and also had an excursion above $1300 for a short period before moving quickly back to the $1293 area again. Over the last few weeks gold has eased back from around $1315 to establish its recent narrow trading range below $1295 before its recent slump.
Way back since March, the $1275 level has established itself as a level of support and on several occasions has propped up the price of gold after reasonable falls. Throughout the second half of March gold fell heavily from resistance around $1400 back down to a several week low near support at $1275. Both these levels remain relevant as $1275 continues to offer support and the $1400 level is likely to play a role again should gold move up higher. Through the first couple of months of this year, gold moved very well from a longer term support level around $1200 up towards a six month higher near $1400 before returning to its present trading levels closer to $1300.
Gold tumbled to its lowest in 8-1/2 months on Thursday as the dollar index traded near a four-year peak after the Federal Reserve signaled that a faster hike in U.S. interest rates might be on the horizon. Spot gold fell to $1,216.01 an ounce early on Thursday, its lowest since Jan. 2, before paring some losses to trade at $1,222.26 by 0038 GMT. The metal lost nearly 1 percent the day before. U.S. gold slid 1 percent to $1,223.20 on Thursday, tracking losses in spot gold. The Fed on Wednesday renewed its pledge to keep interest rates near zero for a "considerable time", but also indicated it could raise borrowing costs faster than expected when it starts moving. In a statement after a two-day meeting of its policy-setting Federal Open Market Committee, it also announced a further $10 billion reduction in its monthly purchases, leaving the program on course to be shuttered next month. The US dollar had been gaining in strength even before the Fed statement, as speculation rose that the U.S. central bank would raise rates sooner than the market consensus of mid-2015. Gold has dropped for five sessions in the last seven as any rise in rates would dim the appeal of non-interest-bearing assets such as bullion.
Gold September 18 at 02:55 GMT 1223.5 H: 1224.7 L: 1216.3
Gold Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1200 | --- | --- | 1290 | 1330 | --- |
During the early hours of the Asian trading session on Thursday, gold is trying to rally higher to back above $1220 after falling so sharply in the last few hours. Current range: trading right around $1223.
Further levels in both directions:
• Below: 1200.
• Above: 1290 and 1330.
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 increased a little to near 75% as gold has fallen sharply back below $1220. The trader sentiment is strongly in favour of long positions.
Economic Releases
- 08:30 UK Retail Sales (Aug)
- 12:30 US Building Permits (Aug)
- 12:30 US Housing Starts (Aug)
- 12:30 US Initial Claims (13/09/2014)
- 14:00 US Philadelphia Fed Survey (Sep)
- EU General Council meeting of the ECB in Frankfurt
- UK Scottish Referendum