Gold for Wednesday, October 1, 2014
For more than a week now gold has thoroughly enjoyed solid support at $1215 after falling strongly a couple of weeks ago from $1240 to just below $1215, however in the last 24 hours it has dropped to its lowest level in 2014 below $1205. The next obvious level of potential support remains 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. Several 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 climbed a little as gold has eased back under $1210. 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 are now distant memories however may play another role 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 $1200.
U.S. gold futures for December delivery settled $7.20 lower at $1,211.60 an ounce, its lowest settle since December 31. The precious metal lost about 6 percent for the month and dropped 8.4 percent for the third quarter, which ended Tuesday. Spot gold was last down 0.6 percent at $1,208 an ounce, after dipping in the last two sessions. The U.S. Federal Reserve indicated earlier this month that it could raise borrowing costs faster than expected when it starts moving, which could boost the dollar and hurt non-interest-bearing bullion. The dollar climbed to a four-year peak against a basket of major currencies in September, helped by strong U.S. economic data and the Fed’s outlook on higher interest rates. It is on track to post its biggest monthly gain in well over a year. A stronger greenback makes the dollar-denominated precious metals more expensive for holders of other currencies. Investors tend to withdraw from commodities and emerging market assets to seek higher yields in U.S. assets when the dollar gains.
Gold October 1 at 00:35 GMT 1207.8 H: 1220.3 L: 1204.4
Gold Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1200 | — | — | 1240 | 1290 | — |
During the early hours of the Asian trading session on Wednesday, Gold is remaining quite steady right below $1210 around $1208 after finishing last week falling sharply back down towards the support at $1215. Current range: trading right around $1208.
Further levels in both directions:
• Below: 1200.
• Above: 1240 and 1290.
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 climbed a little as gold has eased back under $1210. The trader sentiment is strongly in favour of long positions.
Economic Releases
- 01:30 AU Retail trade (Aug)
- 05:00 JP Vehicle Sales (Sep)
- 08:00 EU Manufacturing PMI (Sep)
- 08:30 UK CIPS/Markit Manufacturing PMI (Sep)
- 12:15 US ADP Employment Survey (Sep)
- 13:45 US Manufacturing PMI (Sep)
- 14:00 US Construction Spending (Aug)
- 14:00 US ISM Manufacturing (Sep)
- 14:00 US Vehicle Sales (Sep)