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Will gold prices hold above the 100-day moving average? – Part two

September 28, 2020 - 5:41pm by Gary Wagner

On Friday, September 25 we spoke about the fact that gold had plunged below its 50-day moving average one week prior. Last Thursday and Friday the intraday lows took gold pricing just above the 100-day moving average. The fact that gold prices managed to hold above this key level indicates that on a technical basis there is real support for gold at approximately $1850 per ounce.

Now for a third consecutive trading day, gold prices traded to, but not below this key indicator of intermediate market sentiment. Today’s action in both U.S. equities and gold pricing is a polar opposite of what traders observed a week ago Monday (September 21) when gold futures opened at $1957 and closed at $1910.

As of 4:40 PM EST gold futures basis, the most active December contract is currently fixed at $1886.20, after factoring in today’s gain of $19.90 (+ 1.07%). However, it is the intraday low that warrants our attention. Currently, the 100-day moving average is fixed at $1850.40, and today gold traded to a low of $1851.10 less than one dollar above that average.

Dollar weakness today provided tailwinds contributing a little under one-third of today’s advance in gold futures and spot pricing. According to the KGX (Kitco gold index), spot gold is currently fixed at $1881.10, which is a net gain of $19.90. On closer inspection dollar weakness resulted in a gain of $5.60 per ounce, and a strong buying bias resulted in a net gain of $14.30 on the day.

It is important to acknowledge two upcoming events in the United States that could have an enormous impact on gold prices this week. The first is the presidential debate which will be held tomorrow and secondly is the U.S Labor Department’s jobs report which will be released on Friday. Concurrently there are increased tensions between the United States and China, as well as a stalemate with no deal between the United Kingdom and the European Union in regards to Brexit.

These factors and events could be highly supportive of gold pricing. There is absolute uncertainty as to the outcome of tomorrow’s presidential debates. Uncertainty continues to be the fuel that could reignite gold pricing this week, and as such could take the precious yellow metal’s pricing higher.

Wishing you as always good trading and good health,

Gary S. Wagner - Executive Producer

Previous Reports:

Weekly Report: September 25, 2020 - 6:43pm

Gold futures opened at $1957 on Monday and today is trading at $1864.60. This week traders have witnessed almost a $100 drop in pricing. Monday’s action resulted in gold dropping by $57 taking pricing below its 50-day moving average kicking off the bearish sentiment. On Wednesday gold prices closed below $1900 per ounce for the first time since July 27th, this intra-day low took gold pricing to $1855 per... View report

Daily Report: September 24, 2020 - 6:50pm

Although gold trading higher for one day does not necessarily signal a reversal, any recovery could begin with this type of price action. Today gold did trade to the lowest price point during this most recent correction, trading to an intraday low of $1851.50 before recovering. However, it closed higher than yesterday’s close, and closed above its open. This marks the first day gold has closed higher in... View report

Daily Report: September 23, 2020 - 6:49pm

Over this last month the U.S. dollar has been on an absolute tear, moving higher and gaining value. Consider this; on September 1st, the dollar index hit an intraday low of 91.70, today the dollar index closed up today by +0.45 %, and is fixed at 94.455. That means that the dollar has gained roughly 2.755% in value in less than a single month. But to look deeper into recent moves in the dollar index you... View report