By Stuart McPhee
Gold for Thursday, December 18, 2014
The last week or so has seen gold ease lower away from the resistance level at $1240 back down to find support at $1220 however a few days ago it fell sharply back through the key $1200 level where it is now meeting resistance. Gold enjoyed a solid surge higher up from the key $1200 level to a new six week high just shy of a previous resistance level at $1240 earlier last week. Gold has had a fascination with the $1200 level over the last month which has seen it trade either side of this level, and sure enough, it has returned back there again but is now struggling with resistance. During the second half of November gold made repeated runs at the resistance level at $1200 failing every time, before finally breaking through strongly. Since that time it has returned to back above $1220 before easing lower. 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.
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, around $1320 and $1330. 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.
Spot gold touched positive territory after the Fed offered signaled that it was on track to raise interest rates sometime next year, saying it would take a "patient" approach to raising rates, equating that with phrasing in previous statements about keeping rates near zero for a "considerable time" in a show of confidence in the U.S. economy. Initially flat, spot gold rose 0.2 percent to $1,198 an ounce after the verdict. On Tuesday, the metal hit a session high above $1,221 then a one-week low of $1,188.41 before ending marginally firmer. U.S. gold for February settled 20 cents higher at $1,194.50 an ounce before the announcement. Investors were also eying Russia after the ruble plunged more than 11 percent against the dollar on Tuesday despite a hefty interest rate hike. Investors were also eying Russia after the ruble plunged more than 11 percent against the dollar on Tuesday despite a hefty interest rate hike by the country's central bank.
(Daily chart / 4 hourly chart below)
Gold December 17 at 21:40 GMT 1187.4 H: 1203.1 L: 1183.3
During the early hours of the Asian trading session on Thursday, gold is trying to claw its way back to the key $1200 level after dropping sharply back down to $1190. Current range: trading just below $1190.
Further levels in both directions:
• Below: 1170 and 1130.
• Above: 1200, 1240 and 1255.
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 60% again as gold has dropped sharply. The trader sentiment is ever so slightly in favour of long positions.
- 09:30 UK Retail Sales (Nov)
- 13:30 US Initial Claims (13/12/2014)
- 15:00 US Leading Indicator (Nov)
- 15:00 US Philadelphia Fed Survey (Dec)
- EU EU Leaders Hold Summit in Brussels (to 19th)
- EU General Council meeting of the ECB in Frankfurt
- JP BoJ Monetary Policy meeting (to 19th)
* All release times are GMT