Support Holds, but Bulls Calm on USD Drubbing


Gold Talking Points:

Gold Goes for Grasp of Support, Again

Gold prices came into the month of September with a full head of steam, setting a fresh six-year-high shortly after Labor Day at 1557.10. At that point, Gold prices had remained in a bullish trend for much of the prior three months and that continued a prior bullish run that had started in August of the year before. But, since that fresh six-year-high was set now three months ago, buyers have remained passive as a case of digestion has continued to show in global Gold markets. Support has thus far held around the 38.2% Fibonacci retracement of the summer breakout.

Gold Daily Price Chart

gold gld xau gold daily price chart

Chart prepared by James Stanley; Gold on Tradingview

Gold Holds at Key Support

More recently, Gold prices have seen a slowing from sellers as support has built-in around a key area on the chart. I had discussed the 1453-1460 area in late-October, looking to this zone for a deeper sell-off should bulls fail to promptly return to the bid. Price action has since moved down to this area for multiple tests with a base of support beginning to show in this vicinity.

The four-month-low was set three weeks ago around that Fibonacci level looked at above, getting an assist from this key zone on the chart. Since then sellers haven’t been able to make much ground lower but buyers haven’t exactly taken-over either, leading to a choppy impasse on the charts that remains as we move into the final month of what’s been a busy 2019 in Gold.

Gold Price Eight-Hour Chart

gold eight hour price chart

Chart prepared by James Stanley; Gold on Tradingview

The first trading day of December brought some notable early moves into both US equities and the US Dollar, the latter of which fell from a key area of chart resistance. And while this did help to push Gold prices higher, buyers didn’t exactly take advantage of the situation to test above last Friday’s high around 1465. If bulls were, in fact, on the verge of staging a case of continuation from the earlier-year bullish run, this morning brought the ideal opportunity with worry in the headlines and USD-weakness on the charts. But buyers didn’t force fresh highs, leading to the prospect of continued impasse, at least for now, until bullish Gold drivers may re-appear to drive bulls back to the bid.

Gold Price Four-Hour Chart

gold price four hour chart

Chart prepared by James Stanley; Gold on Tradingview

Gold Near-Term Strategy

As looked at above the longer-term theme of strength remains attractive here but, as has become the case over the past three months, timing that return remains as a challenge. The short-side similarly looks unclear as prices remain near a key zone of support and that could cap top-end profit targets for bearish swing plays, at least for now.

What could remain as workable in the near-term is the prospect of playing mean-reversion, looking for a revisit to support at which point longs could become actionable again. This could be following in the 1453-1455 area on the chart, at which point bullish range entries could be executed in looking for a return to range resistance around current levels.

Alternatively, should buying pressure show in a more pronounced manner, traders can look for a push up to fresh weekly highs to re-open the door for bullish trend strategies. Another zone of resistance potential sits from 1475-1480, and if prices can move into this area, the door re-opens for higher-low support around last week’s high, taken from around 1466.

Gold Price Hourly Chart

gold price hourly chart

Chart prepared by James Stanley; Gold on Tradingview

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts have a section for each major currency, and we also offer a plethora of resources on Gold or USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers an abundance of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX



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