Hawaii Six O - Gary Wagner
Is There Technical Evidence That Gold Has Bottomed?
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Ever since Thursday of last week gold has been trading under pressure. Beginning on April 11th gold prices began a downward spiral, breaking below the 50-day moving average, exactly one day after market forces moved gold prices above that average. The following day on Friday, April 12th gold traded in a defined and extremely compressed range of approximately five dollars, and closed within $0.60 of its opening price.
The following Monday being 15th day of April selling pressure intensified with an expanded range that took the intraday price of gold below its 100-day moving average before closing just above it, indicating possible further weakness which can be viewed as its long tail pierced both the current trend line as well as the .38% retracement level.
Yesterday resulted in another steep decline in gold pricing, taking prices from $1290 per ounce to a low of $1275, but unlike Monday was hard pressed to recover closing just above those lows at $1277. That takes us to today’s pricing activity which once again is resulting in gold closing lower on the day.
As of 5:00 PM Eastern standard time, gold futures basis the most active June contract is trading off by one dollar at $1276.20. Although the Euro dollar saw fractional gains on the day, the U.S. dollar index is trading currently unchanged at 96.655. This simply indicates that this fractional decline today in gold was all due to bearish market sentiment. Oddly gold is the only precious metal with the bears in control of the day.
Spot gold is trading under more pressure than futures and is currently fixed at $1273.60. On closer inspection we can see that as in the futures markets, traders are bidding the precious yellow metal lower, resulting in a decline of $3.80. However, once we factor in the minimal dollar strength of $0.90, physical gold is currently down by $2.90, this according to the KGX (Kitco gold index).
There is one technical factor that we can glean from today’s activity that is based upon yesterday and today’s low. First and foremost, the lows from the last two days are definitively the lowest value or price point that gold has been fixed at this year. Secondly these lows match with in a couple of dollars of the previous yearly low which occurred in mid-January. These lows are also occurring at an important Fibonacci retracement level.
Technically speaking gold pricing may have found tentative support at its intra-day low today. Over the last two trading days we have seen gold trade to a low just above $1275.
Historically the price point of $1275 has been a support for gold. Not only does it match with the lowest price point gold traded to this year, this price point also matches with a Fibonacci retracement level of 50%. The data set used for this rally begins mid-November of last year 2018 when gold was trading at $1196.80 up to the yearly high which occurred in mid-February when gold prices reached at $1350. Although the last two days have provided a price point that could on a technical basis be a support level we need to see gold prices not only hold at this level but begin to trade above it before we can say with any assurance that the recent correction has run its course.
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Wishing you as always, good trading,