Gold Finds Footing at the 50-Day Moving Average

Gold continues to trade lower on the day, breaking below $1500 per ounce for a brief moment before recovering. Currently the 50-day moving average is at $1498.80, a critical and key level that gold futures need to hold to technically remain in an uptrend.

As of 4:15 PM EDT December futures are trading down $10.90 (-0.73%), and fixed at $1504.20. One major factor that has put solid pressure on current gold pricing has been the dollar. Although the dollar is trading in essence unchanged at 98.755, the index has gained value throughout the week. Gold has been trading under pressure for four of the last five weeks. Over the last three consecutive weeks it has tested lows below $1500, with lows at approximately $1492, and recovered and closed above $1500 per ounce each week.

Even with the fundamental events unfolding this week regarding President Trump’s phone conversation to the president of the Ukraine in which it has been reported that he attempted to strong arm him to investigate Joe Biden’s son. It was this event which led to Nancy Pelosi launching a formal impeachment inquiry on Tuesday. Gold reacted indifferent to the news.

According to MarketWatch, “The metal, a traditional haven, has lost ground despite a new round of U.S. political drama. A whistleblower report released on Thursday alleged that President Donald Trump attempted to coerce Ukraine to investigate Democratic rival Joe Biden, and that White House officials acted to cover up his actions. The controversy around the report prompted House Democrats this week to launch a formal impeachment inquiry. Indeed, markets overall have seen only a fleeting impact overall.”

Silver futures are also trading under dramatic pressure giving up almost 2% in trading today. Currently the December contract is fixed at $17.50 after factoring in today’s decline of just over $0.35.

On a technical basis gold has held up rather well considering that it is currently in a corrective period after completing a robust rally of approximately $300. The rally in gold began in May of this year with prices hovering around $1270, and hit a high of $1565 at the end of August. The recent price decline has resulted in gold giving back approximately .23% of the recent gains, which most technicians would consider an extremely shallow retracement. Gold could trade as low as $1450 and still only retrace .38%, a very acceptable and shallow retracement level without sustaining any major chart damage.

The key right now is whether or not gold futures can maintain a price point above the 50-day moving average. If gold can recover next week with pricing above that critical support level, we could see prices move much higher.

Wishing you as always, good trading,