Gold Remains Erratic, Seeing Trade down in Double-Digits Before Bouncing Back at the Close.

It was another extremely erratic day for gold futures yesterday. Beginning from the opening Monday morning in Australia, roughly 36 hours ago, we’ve seen gold futures basis trading as low as 1724.20 USD, which was a double-digit decline on the day. As of 4:20 PM gold futures were up by 12.40 USD, which gives gold a net gain of 0.71 %, at 1765.10 USD.

Monday morning opening in Australia, we saw gold prices open and trade fractionally higher before giving-way to profit-taking which took gold to the intraday low of 1724.20 USD. As buyers started to enter the market taking gold to 1741 USD that prompted some experts to change their protective stops yesterday, while they maintain their long position which was entered on April 1 at 1602 USD.

Although equities worldwide were weaker but mixed, it had been the decline of U.S. equities yesterday that aided in supporting the gold price rise, as we see it continue to act as a safe haven asset. Silver was the odd one out yesterday of the futures market (gold, silver, palladium and platinum) closing lower on the day. It seemed likely in reaction to lower equities pricing coming from the U.S. as silver’s industrial component drove the valuable metal down by 2.39 %, and after factoring in yesterday’s drawdown of 0.38 USD, silver futures were fixed at $15.67 per ounce. Platinum gained almost 0.75 %, and palladium gained almost 0.80 % yesterday.

Chart data as of the 14/04/20 from https://www.tradingview.com

On a technical basis, we see considerable support in gold at 1697 USD to 1700 USD, which is the 38 % Fibonacci retracement of the last leg of this rally which began on April 1, when gold traded to a new low of 1576 USD, up to yesterday’s high of 1771 USD. there’s also support at the 23 % Fibonacci retracement level which occurs at 1726 USD.

Moreover in terms of technical areas we may find resistance once we look at the historical data going back in mid-2011 when we saw gold prices hit record levels before they began to fluctuate between 1537 USD and 1800 USD per ounce. Simply placed on a technical basis there’s no real strong level of resistance until 1800 USD which was the ceiling from 2011. Although there is a vast amount of historical data between 2012 up until the 31st March 2013, there’s virtually no technical resistance between the present price of gold and 1800 USD.

Fundamentally recent action by the present administration, with their payroll loan guarantees, and therefore the Federal Reserve’s action of cutting rates to close zero and simultaneously adding to their balance sheet to accommodate their revised monetary policy of quantitative easing is all adding up to a strong rationale to see gold prices move higher.

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