Gold Markets Looking for Support

Alan Penny

19 November 2019

3 min read

gold trading

  • Major Fibonacci retracement level just under price
  • 50-day EMA just above
  • Geopolitical concerns abound
  • US-China situation persists

Gold markets have been slightly negative to kick off the trading session on Tuesday, but they are still finding plenty of support underneath, based upon a whole plethora of technical reasons, with the most obvious one being the 38.2% Fibonacci retracement level at $1445. Beyond that, there is also plenty of support upon the top of the ascending triangle. This had previously kicked off the latest leg higher, which is closer to the $1450 level.

Geopolitical concerns

The geopolitical concerns around the world will continue to offer plenty of momentum for gold markets. At this point, the market is starting to see a lot of concerns when it comes to the US-China trade situation.  That’s because there are plenty of headlines crossing back and forth and, in both directions, as far as being both positive and negative. Gold will be used as a hedge against that kind of volatility from the concerns surrounding a global slowdown due to the trade war.

there are a lot of mixed signals out there with central banks around the world loosening monetary policy

Beyond that, there are worries about global growth in general, as it has been slowing down. Ultimately, it looks as if there are a lot of mixed signals out there with central banks around the world loosening monetary policy and one of the biggest culprits being the European Central Bank not tightening anytime soon.

The trade going forward

Gold daily chart

The trade going forward in this market is simply to look for value when it appears. This is most easily defined on the chart by looking at short-term pullbacks as buying opportunities, while the market is trying to build up momentum to continue the longer term uptrend.

Underneath, there is plenty of support to be found at the $1450 level, so a lot of traders will be paying attention to that region. If it were to break down, that could change the entire attitude of the market. Although right now most of what we have seen looks likely to be the result of market participants simply digesting the massive gains that we saw in gold as of late.

There are plenty of reasons to think that gold goes higher longer term, and based upon what we have seen so far, every visit of the highs would not be out of the question. Looking at this chart, the 200 day EMA sits just below the $1450 level as well, and longer-term traders will continue to pay attention to that as per usual. Once both of those support levels give way, then you could be looking at a move down to the $1350 level. Although this would more than likely coincide with some type of very bullish “risk on” type of economic news or perhaps a development between the Americans and the Chinese. Currently, that looks to be very unlikely so gold should continue to attract plenty of order flow.

Written By
Alan Penny

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