Could Gold Be Finding Price Support?
Make no mistake about it; this was a terrible week for thosewishing to see gold prices move higher. In fact,gold prices lost almost 3% on the week - one of the most significant weekly drops in over a year. However, the last twotrading days have provided an indicationthat gold pricing might, in fact, befinding some price support.
Ourtechnical studies have indicated that $1,178 is a critical price point for goldfutures. This price point is a 0.78% Fibonacci retracement from an extremelylong data set. This dataset looks atprice action from December 2016 up to current pricing.
Abovethis price point is the 0.618% Fibonacci retracement which occurs at $1,218 perounce. Throughout the month of June and the first part of August, gold pricestraded right around that price point. It seems as though gold prices wereforming a base and attempting to find support before this week's price declinewhich occurred on Monday and Wednesday of this week.
Duringthose two days, gold pricing droppedapproximately $40 in value and traded to a low of $1,180 in December futures.Thursday's price action was unique in that, although there was a $21differential between the high and low of that day, gold prices reboundedsharply, which resulted in closing only a couple of dollars from its openingprice.
Whatwas most impressive about the price recovery on Thursday was how dramaticallygold pricing rebounded after reaching a low of $1,167 per ounce, before closingat $1,183. Today gold futures are currently trading up by approximately fivedollars, and the most active DecemberComex contract is presently fixed at $1,189.
In fact, physical gold is actuallyfaring better in terms of price gain today. As of 3:30 PM Eastern standard time, spot goldis currently trading up $8.60 and fixed at $1,182.30. The majority of thisprice increase is directly related to dollar weakness contributing $5.50 ofvalue per ounce. The remaining $3.10 gain is directly attributable to tradersbidding up the precious yellow metal.
Declinesin gold pricing over the last couple of months have been directly tied to U.S. dollar strength. It is the dollar whichis leading gold prices, and not the other way around. Over the last couple ofdays, the dollar has been losing value, and today is currently trading off by over half a percent at 96.005. It is yesterdaysand today's decline in dollar value that has been instrumental in taking goldprices from the recent lows to higher ground.
Althoughit is much too early to tell, recent activity could, in fact, be signaling that the dollar has found some realresistance and gold pricing has found substantial support.
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Wishing you as always, good trading,
By Gary WagnerContributing tokitco.com
Follow @garyswagner
gary@thegoldforecast.comwww.thegoldforecast.com 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.