Gold for Monday, March 23, 2015
Throughout last week gold has shown some life and reversed by moving strongly off the support at $1150 up to a two week high near $1190. It now has its eyes firmly on the key $1200 level however selling pressure from this level is likely. 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 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 held recent gains to trade near a two-week high on Friday and was headed for its biggest weekly jump since January, after the Federal Reserve cautioned over its rate hike path and US economic growth. Spot gold was up 0.8 percent to $1,180 an ounce.
The metal is up about 1 percent for the week—its biggest weekly gain since late January. Gold had dipped to a four-month low earlier this week as concerns mounted over higher US interest rates which could dent the demand for non-interest bearing bullion. The Fed, however, sounded a cautious note on the health of the economic recovery after its two-day policy meet this week, and slashed its median estimate for the federal funds rate and expressed concern over the strength in the dollar.
“Gold (is) still getting traction from dovishly perceived FOMC statement, short-covering and fresh purchases,” said HSBA analyst James Steel, referring to the Federal Open Market Committee. Gold’s rise on Thursday despite a higher dollar and weaker oil prices could indicate the underlying strength, he said.
(Daily chart / 4 hourly chart below)
Gold March 22 at 23:50 GMT 1186.7 H: 1187.3 L: 1182.4
Gold Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1150 | — | — | 1200 | 1240 | 1300 |
During the early hours of the Asian trading session on Monday, Gold is rallying a little higher with eyes on the key $1200 level. Current range: trading right below $1200 around $1187.
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
- 11:00 UK CBI Distributive Trades (23rd-27th) (Mar)
- 14:00 US Existing home sales (Feb)
- 15:00 EU Flash Consumer Sentiment (Mar)