Gold Continues to Trade Sideways

The most prominent characteristic of gold pricing has been its narrow and tightly defined trading range. On October 11, gold gained over $30 in trading, breaking above key levels of resistance. These resistance levels began at $1,200, a key psychological level, the 50-day moving average which was at $1,204, and finally the 0.618% retracement level at $1,217.60.

From there, gold prices began to trade sideways with the key level of support at $1,218, and the resistance level at the 100-day moving average, which is currently at $1,229.90. Last week gold prices were defined by those two price points, never trading above the 100-day moving average or below the 0.618% retracement level.

In fact, on each trading day beginning on Monday of last week, gold prices have traded above the 100-day moving average and closed below that price point. Today was no exception with gold opening at $1,230.50, just $0.40 shy of the 100-day moving average and closing $3.20 lower at $1,225.50. If anything, the price range has been narrowing as it trades between resistance and support.

Any upside potential rally over the last week has been limited by dollar strength. Today is no exception. Today the dollar index gained 31 points and is currently fixed at 95.76, which is an increase of +0.33%.

As of 4:30 PM Eastern standard time, spot gold is currently fixed at $1,222.20, with a net decline of $4.30 on the day. According to the KGX (Kitco Gold Index), today’s decline is entirely due to U.S. dollar strength. Traders were basically neutral in terms of gold pricing today, resulting in an increase of $0.10 per ounce in value. However, dollar strength contributed a decline of $4.40 per ounce, resulting in today’s net change of -$4.30.

Market participants continue to focus on a number of variables as it affects the financial markets. These include the current trade war between the United States and China and the European Union’s potential problems with Italy’s budget and Brexit.

Upcoming economic data this week will include the durable goods numbers as well as Friday’s release of the third-quarter gross domestic product (GDP). These numbers could certainly influence decisions made by the Federal Reserve and therefore have an effect on U.S. dollar weakness or strength, which in turn will directly influence the future direction of gold prices.

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Wishing you as always, good trading,