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Gold continues to be range bound after hitting the upper resistance trend line

Commentaries & Views

Gold hit resistance and traded lower on the day. Gold futures basis the most active August contract opened at $1750.30, and then traded to an intraday high of $1757. This became the point when sellers entered the market and took prices dramatically lower. After trading to a low intraday of $1728, gold prices recovered. As of 5:00 PM EST gold futures are currently down $16.20 (- 0.93%) and fixed at $1734.10. This decline occurred even with mild tailwinds from a weaker U.S. dollar. The dollar index continues to trade lower, giving up 14 points (- 0.14%) in trading today, and is currently fixed at 97.68.

As reported in MarketWatch today, Jeff Wright, Executive Vice President of GoldMining Inc. said, “Every fundamental signal for gold was bullish earlier [Tuesday]. The sudden reversal is contrarian and profit taking.” He also said that, “Gold has been steady through protests turning into riots around the country, U.S.-China tensions are still rising, not getting better.”

Also reported by MarketWatch, Ipek Ozkardeskaya, senior analyst at Swissquote Bank wrote “The yellow metal sees support near the $1,725 per ounce, even though the buyers lose appetite approaching the $1,750 mark on uncertainty regarding a renewed risk selloff despite unpromising news from the U.S., China front.”

The truth of the matter is that beginning on March 15th, 2020, when gold traded to an intra-day low of $1450, and then ran to the yearly high at $1788 on April 24th, gold’s range has been compressing. This compression can be seen as a series of lower highs, and higher lows over the last two months. Right after gold hit the record price for 2020 at $1788, pricing began to trade sideways, range bound as it traded to a higher low on April 21st of $1665, and then to a lower high only three days later, when on April 23rd gold traded to $1763. The price range continues to be contracting even up to today’s intraday high of $1757, before selling off and giving up over $16 on the day.

Our technical studies indicate there continues to be major support just above $1700 per ounce, with resistance at $1765 and major resistance at $1775.

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Wishing you as always, good trading,

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