Gold for Tuesday, October 7, 2014
For the best part of the last couple of weeks 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 few days it has dropped to its lowest level in 2014 near $1180. 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. 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 eased back towards 60% as gold has rallied back above $1200. 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.
Gold rose 1.4 percent on Monday, its biggest one-day gain in two months, as the dollar’s sharp retreat sparked fresh physical demand and short covering after bullion earlier hit a 15-month low, traders said. Other precious metals rebounded broadly as the dollar’s rally took a breather on profit-taking that emerged after Friday’s jobs report reinforced the view the Federal Reserve would raise U.S. interest rates in mid-2015. The U.S. dollar index fell 0.8 percent. Earlier on Monday, the yellow metal fell to its weakest since late June 2013, within reach of a four-year low at $1,180 an ounce. On Friday, gold entered into a correction phase, defined as a 10 percent drop from its most recent high at $1,345 reached in July. “Gold’s drop below $1,200 an ounce is sparking some more physical buying, especially from (Asia),” said Edmund Moy, chief strategist for California-based Fortress Gold, a provider of bullion-backed retirement accounts. Spot gold rose 1.4 percent to $1,207 an ounce, having earlier hit a 15-month low at $1,183.46. U.S. gold futures settled up $14.40 at $1,207.30 an ounce in heavy trading volume.
Gold October 7 at 02:45 GMT 1204.8 H: 1208.1 L: 1204.7
Gold Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1200 | — | — | 1240 | 1290 | — |
During the early hours of the Asian trading session on Tuesday, Gold is just starting to ease back towards $1200 after running into some resistance around $1208. Current range: trading right around $1205.
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 eased back towards 60% as gold has rallied back above $1200. The trader sentiment is strongly in favour of long positions.
Economic Releases
- 23:01 (Mon) UK BRC Shop price index (Sep)
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- 03:30 AU RBA – Overnight Rate
- 05:00 JP Leading indicator (Prelim.) (Aug)
- 08:30 UK Industrial Production (Aug)
- 08:30 UK Manufacturing Production (Aug)
- 12:30 CA Building permits (Aug)
- 14:00 UK NIESR GDP Est. (Sep)
- 14:00 US IBD Consumer Optimism (Oct)
- 19:00 US Consumer Credit (Aug)