Gold Prices Stabilize After Falling to a Four-Month Low

Gold prices stabilized in trading today, with gold futures closing fractionally higher and physical gold trading fractionally lower on the day. Despite the fact that gold futures and spot gold closed in different directions, the net change on the day in both markets was fractional, showing signs of price stabilization.

As of 4:00 PM Eastern standard time, gold futures (February 2018 contract) are trading up $1.80 (+0.13%). Today’s trading range was compressed to a six-dollar range, trading to a high of $1271.80 and a low of $1264.80.

At the same time, spot gold is currently fixed at $1263.90 which is a decline of two dollars on the day. On closer inspection, buyers actually bid the market up by about $1.70. However, a strong U.S. dollar created headwinds of $3.70 to result in a loss of two dollars on the day.

The key is not whether gold prices were higher or lower today but instead, focus on the narrowly defined range and relatively fractional price change from yesterday’s close. This clearly illustrates that pricing is beginning to stabilize after the extended drop which took gold pricing from $1300 to its current value at $1266.

Since November 27, gold prices have declined, breaking and closing below its 50-day moving average on November 29. This would be followed by yesterday’s action, which resulted in prices closing below the 200-day moving average.

With today’s fractional move, the real question is will gold be able to find support around the 200-day moving average or is this signaling dramatically lower pricing in gold ahead?

Traders and market participants are waiting for the U.S. jobs report which will come out on Friday. Today ADP released its national employment report for November which resulted in a rise of 190,000 jobs added last month. Estimates for Friday’s Labor Department report for nonfarm payroll is 195,000.

This will be the final piece of data the Federal Reserve members will use to determine whether or not they will initiate a final interest rate hike this month. Although a rate hike has been pretty much factored into market activity, any deviation from current estimates could affect market prices.

Wishing you as always, good trading,