Gold is still range bound, but market sentiment shifting to bullish

While gold posted strong gains on the day, on a week-by-week basis gold futures closed very close to its opening price on Monday. Much of this week’s price swings were directly tied to wild variations in dollar strength as well as dollar weakness. On Wednesday the dollar index traded to a low of 90.12, and closed at 90.67 gaining approximately ½ a percent. Today the dollar lost approximately half a percent opening at 90.735 and closing at 90.285.

The last time we have seen we have seen the dollar index trading at this low besides the beginning of this year, was during the first two months of 2018.

Gold futures basis, the most active Comex contract, posted a gain of $20 (+1.10%) and closed out the week at $1844. However, its gains for the week were a more modest $7.70. Even with today’s $20 gain gold futures remain range bound, although current pricing puts it at the top of that range. Our studies also indicate that he 200-day moving average remains as major resistance at approximately $1854.

Gold’s three major moving averages (50, 100 and 200-day) are in full bearish orientation. With the exception of the 200-day moving average, current pricing in gold is above all three major moving averages.

Concurrently the dollar index, is trading below all of its major moving averages. The dollar also has a lot of technical as well as fundamental hurdles before it can be viewed as having bullish market sentiment.

Silver on the other hand also experienced major gains closing the day $0.46 (+1.76%) higher. Silver is an example of a metal whose major industrial applications grant it the ability to run strong in both times of prosperity, while its safe-haven appeal lends it strength in uncertainty. Silver is still trading near highs of August,2020. At the same time, both the USD and gold futures are trading at lower levels than their recent highs of 2020.

Wishing you, as always, good trading and good health,