Gold Finishes Above Key Levels
Goldhad one of its most dynamic days yesterday as it opened below $1,200 per ounceand closed $30 higher, settling at $1,227 per ounce. Today gold prices haveretreated slightly, giving back a measured portion of yesterday's gains.
As of 4:35 PM Eastern standard time, gold futures arecurrently down $6.30, with the most active December Comex contract fixed at $1,221.30.
Yesterday'sstrong uptick and price gains were a result of a falling U.S. equities market and dollar weakness. On Wednesday and Thursday,the Dow Jones Industrial Average lost over 5%, declining by 1,300 points.
Todaythe Dow has gained back 1.15% as it traded 287 points higher, closing at25,339.99. The NASDAQ composite gained 2.29% in trading today with a gain of167 points. The tech-heavy compositeindex is now at 7,496.89.
Thedollar index also recovered slightly gaining almost a quarter percent and iscurrently fixed at 94.935, after adding today's gains of +0.229 points.
Dollarstrength, a rebounding U.S. equities market, and the upcoming meeting betweenthe presidents of both the United States and China in November has resulted ingold having a mild round of profit-taking to close out the week.
What can we take awayfrom this week's wild upside move and today's measured retracement?
Firstand foremost, for the first time in quite a while, we saw gold act as atraditional safe haven asset along withbonds. The flight from equities to gold was extremely short-lived. However, it confirmed one of the primary conventional intrinsic components of gold: itsrole as a safe haven asset.
Secondly,on a technical level, yesterday's strongprice advance took current pricing above $1,200, a key psychological level of either resistance or support, and moreimportantly above the 50- day moving average. The last occurrence of goldclosing above its 50-day moving average was on April 20.
Lastly,yesterday's strong gains took gold prices above the .618% retracement which iscurrently at $1,217.60. This retracement is from an extremely long data setbeginning at the end of 2016 when gold was trading at $1,124 per ounce, up tothis year's record highs at $1,369 per ounce.
Althoughtoday gold lost some of yesterday's gains,it still is effectively trading above the 0.618% retracement. Based on ourtechnical studies we are currently putting support at $1,218 with major supportat $1,200 per ounce.
We seethe current level of resistance at 1,240 to 1,246 which is based upon the 50% retracement as well as lows seen in Decemberof last year.
Mostimportantly yesterday's dynamic upside move resulted in gold trading out of itsdefined and narrow trading range for the first time since August. If gold caneffectively continue to trade above $1,218 per ounce, it could move to higherground.
Ifgold does move higher over the next couple of weeks,it will confirm that this week's move above the 50-day moving average is signalingan end to the long and extended correction as market sentiment shifts back to abullish demeanor.
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Wishing you as always, good trading,
By Gary WagnerContributing tokitco.com
Follow @garyswagner
gary@thegoldforecast.comwww.thegoldforecast.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.  |