Gold Reaches Another Milestone This Week

Gold futures finished the day with moderate gains, as the most active December Comex contract closed $3.80 higher at $1,236.20. Although gold prices finished higher on the week, after gaining approximately $ 6.00, price advances were limited once again by dollar strength.

That being said, gold prices have managed to increase in value now for the fourth consecutive week. Another noteworthy characteristic this week was the intra-day high of $1,246 that was hit in trading today. Today’s high matched up precisely with the 50% Fibonacci retracement which is at $1,246.40. This price point has now defined current price resistance. The former resistance which occurred at the 0.618% retracement ($1,217.00) has now become a critical area of support.

On Monday, gold pricing opened just at the 100-day moving average and closed slightly lower on the day. On Tuesday, gold exhibited a brisk upside move closing above the 100-day moving average for the first time since the end of April.

Market technicians utilize three distinct moving averages with the time cycles of 50, 100, and 200 days to determine if a commodity is trending on a short, intermediate, or long-term cycle. When a commodities price trades below all three moving averages, it is believed that the market is in a bearish trend.

To identify a key reversal in a market that has been in a defined bearish trend, it first needs to break and close above the shortest-term moving average, the 50-day. A close above this moving average offers the technician evidence that a market has pivoted and has now entered a short-term bullish trend.

That event occurred on October 11 in gold, when prices surged over $30 in a single day and effectively closed above gold’s 50-day moving average.

This week gold pricing reached another milestone when on Tuesday, October 23, gold prices traded and closed above the 100-day moving average. This indicates a real potential for the current short-term trend to become an intermediate trend. This is a strong indication that gold prices will move higher next week.

The next major milestone for gold’s current trend would occur if and when pricing moves and closes above the 200-day moving average, signaling that the current rally in gold has matured into a long-term trend.

Wishing you as always, good trading,