Heading into late November, our view was that gold futures would hold the $1255 to $1260 area into the end of the year. However, the price has since told us that this floor was wrong, so we are now revising our technical view for price action through the end of this month.
The daily candlestick chart below shows the gold market trading around $1243, its lowest level since July. This chart covers price action since late January.
We have no bias for direction since many of the indicators we watch are showing a mixed bag. Seasonality suggests bullishness; however, the CFTC’s Commitment of Traders Report suggests too many longs, and the U.S. dollar fundamentals are strengthening, which is bearish for gold.
What could make a difference is how this market reacts to today’s FOMC report at 2:00 pm EST. Gold’s reaction should be relevant not only through today but through the rest of the week.
We will look first at support zones. The lower blue trendline at $1226 connects the January low to the July low and is our first level of support. Below that is the red trendline at $1215 that connects the March low to the July low. We do believe that these trend lines will offer support into the end of the year.
Now we will look at levels to the upside. First, the orange shaded region on the chart from $1263 to $1268 has been vital support since August, but we now expect this zone to turn to resistance on the first touch. Our next higher level would be the upper green trendline at $1285 connecting the August high to the November high. Here we also expect resistance on the first touch. Finally, the yellow shaded region from $1297 to $1307 marks the zone in which we expect the price to remain into the end of the year.
As gold attempts to either find a bottom or sink to new recent lows, traders should be aware of relevant items on the economic calendar. This is important especially for the remainder of this week, during which the calendar features the items below.
Consumer Price Index 8:30 AM ET
FOMC Meeting Announcement 2:00 PM ET
FOMC Forecasts 2:00 PM ET
Fed Chair Press Conference 2:30 PM ET
Jobless Claims 8:30 AM ET
Retail Sales 8:30 AM ET
PMI Composite Flash 9:45 AM ET
Empire State Mfg Survey 8:30 AM ET
Industrial Production 9:15 AM ET
Please note that this is a partial list highlighting scheduled economic events for the U.S. just through the remainder of this week.