Considering the recent rally in gold pricing which in essence began in the middle of November last year when gold pricing was trading at just about $1200 per ounce, and its respectable price gains to $1300, this most recent price decline can be put in the context of a simple shallow retracement, or the beginning of a much deeper correction.
So, the question becomes was the recent decline in gold pricing a “one and done” or an indication of lower pricing I had. Although that question will be answered as more data is presented to us there are some observations that we can make today.
First, there seems to be strong and consistent resistance for gold pricing at approximately $1300 per ounce. After challenging that price point on January 4 when gold reached an intraday high of $1300.40, it has not been able to challenge or breach that price point.
Secondly, the support level that we identified at $1275, the low achieved today seems to be holding indicating that this is still a major support level.
Third, although moving averages are a lagging indicator expressing price movement that already has passed, today we identified a golden cross, a point in time in which the short-term 50-day moving average has just crossed above the longer-term 200-day moving average. On a technical basis this is absolutely significant and indicates the potential for gold pricing to find solid footing here and trade to higher ground.
Given that there is been a partial government shutdown for over 31 days now, it seems gold as a safe haven asset has not been reacting in any bullish manner to this event. However, it is reacting to the nuanced changes witnessed in the current negotiation between the United States and China as they attempt to come to a resolution in regards to the current trade dispute/war.
Gold futures are trading fractionally higher on the day, with the February Comex contract currently fixed at $1283.80 which is a net gain of $1.20 on the day. This gain is partially based upon renewed tensions which are growing following reports that the meeting with China officials in the United States has been canceled by the U.S.
it is widely accepted that the continued trade dispute has a profoundly negative impact on the global economic Outlook.
As reported in MarketWatch “U.S. officials canceled preparatory trade talks this week with two Chinese vice ministers, ahead of a higher-level meeting in Washington later this month, according to a Financial Times report. The countries face a March 1 deadline to reach an agreement on trade.
Today’s risk off environment with weaker equities are also supportive of higher gold prices.
For those who would like more information, simply use this link.
Wishing you as always, good trading.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.