Gold – Struggling at Resistance at $1200
London (Nov 25) Over several days last week Gold made repeated runs at the resistance level at $1200 and failed every time, before finishing the week breaking through ever so slightly, although it is now slightly below $1200 and experiencing resistance there. In the last couple of weeks Gold has enjoyed a strong resurgence back to the key $1200 level where it has met stiff resistance. 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.
As to be expected, the key $1200 level is likely to play a role and provide reasonable resistance. 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. The OANDA long position ratio for Gold has eased back towards 55% as gold has rallied back up to the resistance level at $1200 again.
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.
Gold edged settled lower on Monday, as the dollar eased, but prices were still not far from a three-week high after a surprise rate cut in China raised hopes that demand for bullion in the top consumer would increase. China cut interest rates unexpectedly on Friday, stepping up efforts to support the world’s second-biggest economy, and could even be prepared to reduce them again, according to sources. Spot gold was last down 0.2 percent at $1,198 an ounce. It hit a three-week high of $1,207.70 on Friday. U.S. gold futures ended $2.00 lower at $1,195.70 an ounce. “The three-week high hit on Friday is just a pause in the downtrend. It is true the speculators community has come back a bit but overall the big macro picture has not changed,” ABN Amro analyst Georgette Boele said. “We still expect interest rates to be hiked next year in the U.S. and possibly more quickly than the market currently anticipates – that will pressure gold.”
Source: ForexNews
