December Gold: Open= 595.8 High= 599.5 Low=593.6 Close= 598.5 +5.8
For the second day in a row, gold prices gapped open higher. Technical buying supported prices throughout the day, leaving two gaps in two days, although today’s gap was relatively minor. All the meanwhile, with another $3.5 dollar move higher, the market will close a gap left on the chart on October 3rd.
Friday’s gap opening and close above the 25 day moving average left the bulls with a technical edge and follow through buying buoyed prices after a relatively quiet weekend. There are a few notes of interest however. Long positions of gold by funds have been declining for five straight weeks but there was a slight build in silver last week. Will this week’s COT show resumed fund buying? It’s likely. Also, the United Nations managed to pass a resolution on North Korea but tension is relatively low key currently. China announced it has begun inspected goods crossing the border into North Korea, though this is seen as a mere symbolic effort.
Clearly a near term bottom in gold has been found, with solid support now at $589. It will take more upside to attract real fund buying but interest should be piqued. A move back above $620 may set off buy stops and accelerate a move higher. Expect some consolidation on a move to $615. Prices have already advanced over $30 since an Oct 6th reversal. An advance to $615 will be a $50 recovery and a short term objective. Gold bulls need a developing story (oil?) to attract attention or aggressive buying of funds to break out of this trading channel.
Much of what happened over the past week has been largely technical in nature, without a solid fundamental story to latch to or rally around. Crude oil today put in the first solid close in two weeks and appears to making a short term bottom. The dollar has been consolidating the four sessions after marking 5 month highs but momentum is waning. This leaves gold a bullish edge
And some support to work from but will need more substance.
A short term forecast would concede another $15 dollars to the rally in gold and perhaps a good $7 to a rally in crude oil. A strong enough recovery in the energy complex could prompt a larger rally in the metals, with gold up to $638 and silver even to $13.00. The MACD on gold and silver have turned positive, and crude oil has been positive for about two weeks.
Support for gold comes in at $595,$592 and 589, with major support at $580. Resistance is seen at $600, $606.5, and $610, with strong resistance at $615.
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