Revised End-of-Year Technical View for Gold

Revised End-of-Year Technical View for Gold

Revised End-of-Year Technical View for Gold
Revised End-of-Year Technical View for Gold Getty Images

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.

Wednesday:

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

Thursday

Jobless Claims 8:30 AM ET

Retail Sales 8:30 AM ET

PMI Composite Flash 9:45 AM ET

Friday

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.

 

The information contained above may have been prepared by independent third parties contracted by Nadex. In addition to the disclaimer below, the material on this page is for informational and educational purposes only and should not be considered an offer or solicitation to buy or sell any financial instrument on Nadex or elsewhere. Please note, exchange fees may not be included in all examples provided. View the current Nadex fee schedule. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representations or warranties are given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk and any trading decisions that you make are solely your responsibility Trading on Nadex involves financial risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results. Nadex instruments include forex, stock indexes, commodity futures, and economic events.

Nadex binary options and spreads can be volatile and investors risk losing their investment on any given transaction. However, the limited-risk nature of Nadex contracts ensures investors cannot lose more than the cost to enter the transaction. Nadex is subject to U.S. regulatory oversight by the CFTC.