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

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.

Wishing you as always good trading and good health,