April Gold settles 1254.3 for the week down $5.10 ended March 18, 2016
Gold edged lower Friday and ended the week slightly lower as the dollar steadied after suffering significant losses following the FOMC statement on Wednesday. Gold regained much of the week’s early losses following the FOMC announcement as policymakers offered new fresh projections for future rate increases. Policymakers now expect two quarter point increases by year end instead of the four rate increases earlier projected in December. Expectations the Fed would have raised rates four times this year faded in January and February as financial crises in China, Europe, and Japan roiled global financial markets. In turn investors have poured into gold this year, as the yellow metal has gained over eighteen percent in 2016.
The rally in gold from the weekly lows below 1230.0 has been impressive, with the key culprit being the sharp slide in the dollar. The dollar decline was precipitated by the delay of the Fed’s tightening measures that are seen as inflationary. Macroeconomic uncertainty is on the decline in my view, as we have seen strong rebounds in other sectors such as energy, grain, and equity products. Gold derivative holdings increased late this week to 48.7 million ounces, which confirms buying interest as purchase prices surged.
Economic data is light next week as data on housing and GDP top the headlines. The GDP reading will released next Friday although the market is closed for the Good Friday observance. Technically the market remains in an uptrend despite the small weekly loss. I would continue to watch the 1228 level as support, as that price represented the yearly first resistance level which is now support. If that is violated with a strong close under it, the next level of longer term support is down at 1185.0, which is the 50-day moving average. Upside targets are last week’s highs at 1287.8 and then 1296.0 basis April futures.
Weekly Swing's GCJ 16 for the week of March 21st through March 25th
Resistance#2 1296.6
Resistance#1 1275.0
Pivot 1250.7
Support#1 1229.6
Support#2 1204.8