Have Gold Prices Bottomed?

November 21, 2018 - 6:23pm

 by Gary Wagner

Gold prices are holding steady above the 50-day and 100-day moving averages as well as critical support sitting at $1218. This support level is based upon the .618% Fibonacci retracement level from a large data beginning in December 2016 when gold prices bottomed at $1124 per oz., up to the multi-year high that occurred $1369 per oz. 

Today’s uptick in Gold took it to a 2-week high and currently December futures, (GCZ8) is trading at $1227.9 as of 2:00 PM E.S.T. This recent jump in pricing does not take it out of the trading range that gold has been trapped in ($1180 to $1240) since August.

Recent action comprises the first few steps that are needed to take place in order to confirm that prices have bottomed, if so, gold could trade as high as 1250, the current resistance.

On November 16 gold opened at the 50-day moving average, and then closed above the 100-day moving average. Prices also surpassed former resistance at $1218 (the .618% retracement).  

There is a line in the sand for many current analysts and traders at $1200 that gold must hold above. The fact that it dipped beneath this level on Tuesday, November 13 to approximately $1199 and recovered is bullish. Since then we have seen prices increase by 25 dollars per ounce.

Most of the gains in gold today were due to buying with tailwinds from a slightly weaker U.S dollar.

A weakening in the U.S. dollar is the most likely catalyst needed to bring gold back to its former glory and out of its current range. This would occur If the Federal Reserve does not raise rates in December.

The fact that U.S stocks have been in a decline since November 8, and some tepid economic data, could cause the Fed to change its current Monetary plan to raise rates a 4th time this year.

Finally we want to wish all a blessed holiday season, and to be thankful for all we have.

Wishing as always, good trading,

Gary S. Wagner - Executive Producer

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