- Middle East tensions flare
- Economic uncertainty
- US dollar takes a hit
- Gold markets likely to go higher
To kick off the week, we have seen gold shoot straight up in the air. This is not much of a surprise considering that on Friday, the United States killed a top-level Iranian general in retaliation for several other minor attacks in Iraq.
Since then, a lot of chaotic action was witnessed around the world. When traders see this many things potentially going wrong at the same time, it’s very common for them to buy gold, as it can offer some safety.
Resulting uncertainty all around
The attack on a US base in Kenya over the weekend shows just how widespread the chaos could end up being, as retaliatory strikes against the United States are almost certain to begin. President Donald Trump has warned that any aggressive action by the Iranians would warrant an “excessive retaliation.” With that, while the Iranians are grieving the loss of General Suleimani, various extremist groups around the Middle East will be targeting US interests.
In other words, the situation will go far beyond just the United States and Iran. The attack in Kenya was carried out by terrorist group Al-Shabab, which has its roots in Somalia.
Now, the Iranians will have to save face by retaliating, while being careful not to do too much to provoke a full-blown war with the United States – something it cannot win.
It should also be noted that there is some economic uncertainty out there. The United States dollar has taken a hit over the last couple of days against several of the other major currencies, such as the euro, the pound, and the Australian dollar. This in itself can provide a measure of upward pressure in the gold markets.
Technical analysis for gold
Gold futures gapped higher to kick off the week, reaching as high as $1590 before pulling back a little. The market has been finding some trading volume near the $1580 level, but the gap has yet to be filled. More than likely, the market will pull back to fill that gap, which is closer to the $1555 level, where the “point of control” from volume profile trading on Friday will offer support.
Gold markets have taken off to the upside and look very likely to continue going higher. $1600 is most certainly within the realm of possibility in the short term, with a longer-term target closer to the $1800 level based on longer-term charts. A pullback should continue to offer plenty of value, and it will probably be some type of Iranian retaliation that drives gold higher.
In the meantime, the market simply waits to see how the Iranians will react.
- Gold markets rally into the new year
- Recent breakout
- Confirmed retest of support
- International atmosphere major influencer
During 2019, there has been a “two-speed market” when it comes to the gold markets. There was an initial shot straight up in the air, reaching towards the $1550 level before pulling back for several months, forming a down trending channel. This put the market back to sleep but eventually, it reached towards the 38.2% Fibonacci retracement level, at the crucial $1450 level. That level was previously the highs from an ascending triangle and forms the future picture for Gold in 2020.
Plenty of reasons for gold to rally
The gold markets should get a boost for plenty of reasons going into 2020. This is a market that has a lot of different possible catalysts for moving. On the one hand, gold does rally due to a softer US dollar, but it also could be due to people running toward safety. In this sense, there are a couple of different scenarios that should continue to benefit gold going forward.
The US dollar has lost a bit of steam against the major currencies such as the Euro and the Aussie. It should give a boost towards the gold market, as it is priced in US dollars, at least in the most liquid forms. If the US dollar continues to soften, that should provide a little push for gold to go higher. The Federal Reserve continues to offer repo operations. With softer than usual economic numbers coming out of the United States, there is the possibility that the Federal Reserve will have to loosen monetary policy. If that is going to be the case, it’s very likely that the gold markets will react as well, moving higher.
The Americans and the Chinese have suggested that a “Phase 1 deal” is getting ready to be signed on January 15, and that is bullish for risk appetite. However, if there will be some type of setback or if “Phase 2” is going to take more work, then gold is likely to rally as well. There are also plenty of other concerns when it comes to various hot spots around the world, such as Turkey, Venezuela, North Korea, and of course any tensions in the Middle East. In other words, there are plenty of actors out there that could cause issues.
Going forward, it’s very likely that the market is ready to go higher into 2020, and longer-term investors will more than likely not only hold onto gold but look at dips as buying opportunities. At this point, gold looks as if it is very likely to continue gaining strength in the new year, and therefore could be one of the better-performing assets. Gold will continue to move right along with the plethora of headlines that are sure to cross the wires.
- Major downtrend line broken
- Moving averages turning higher
- $1500 just above
The gold markets rallied significantly during the trading session on Tuesday, going into the Christmas holiday. We did not break above the $1500 level right away, but it does look like an area that we will be challenging. That level being broken to the outside should send this market much higher, as it is a psychological barrier. Ultimately, gold is a reflection of both the US dollar and sometimes a reflection of risk appetite in general. It has been trying to reach higher, and we are likely to continue the longer-term uptrend that we have seen.
Data shows that gold markets have rallied significantly during the trading session on Tuesday, which is interesting considering the volumes are low and it has allowed traders to finally break out of the descending channel that you see on the chart. The $1500 level is a psychologically important level, and if we can break above there then it should bring in fresh buying. In the meantime, if the market pulls back, there are a couple of things that could keep it somewhat lifted. The 50 day EMA is curling higher and it looks as if it is starting to offer dynamic support. The downtrend line should also be supportive, as resistance then becomes support.
To the upside, if we do break above the $1500 level it’s likely that the market goes looking towards the $1520 level next. That’s an area that should offer resistance, but after that, it’s likely that the market then goes looking towards the $1550 level next. Ultimately, this is a market that looks ready to continue the longer-term uptrend, as the support at the $1450 level has been showing itself to be supportive. Plus the 38.2% Fibonacci retracement level is found there as well. The fact that the market pulls back to the 38.2% Fibonacci retracement level and then bounces shows just how strong the longer-term uptrend could be. With that in mind, it’s very likely the gold has further to go.
The trade going forward
The trade going forward with gold is to simply buy pullbacks as they will then give you an opportunity to pick up a bit of value. As long as the market can stay above the 50 day EMA it’s likely that the market will continue to go higher.
To the downside, it’s not until we break down below the $1450 level that the market would be showing signs of exhaustion and a potential breakdown. Ultimately though, it does look as if gold is ready to go higher, perhaps even for a longer-term move towards the highs again.
- Gold markets relatively flat
- Holidays weigh upon volume
- 50-day EMA acting as a magnet
During trading on Thursday, the gold markets were flat yet again, as we have seen all week. This isn’t much of a surprise, because there are a lot of moving pieces right now and there a lot of different things coming into focus at the same time.
Multiple factors influencing the gold markets
There are multiple factors affecting the gold markets right now, as well as many of the other markets around the world. At this point, the majority of market participants are paying more attention to the holidays than what’s going on in the markets, and this is reflected in the lack of movement.
The technical analysis suggests that the down trending channel is still in play, and it looks as if the gold market simply has nowhere to be. That’s because of the 50-day EMA and the downtrend line at the top of this channel. There are a lot of things going on at the same time that could keep this market soft.
Underneath, there is the $1450 level which has been a massive support lately. Recently, the market has been using that level as a “floor”, and with the multitudes of problems out there, it makes sense that gold would have a little bit of support somewhere. This is also the 38.2% Fibonacci retracement level from the previous move, and this little pullback is probably healthy for the longer term uptrend.
Beyond all of this, gold has been doing nothing against the backdrop of the US/China trade deal. Granted, there has been a potential breakthrough in the idea of a “Phase 1 deal”, but it seems very unlikely that we are going to get any type of clarity in the short term. After all, the deal has been light on details, and for that matter has been very quiet since the announcement. It’s as if the “risk on/risk off” attitude of gold shows just how the market feels right now, in a state of confusion.
Going forward, it’s very likely that gold will try to make a breakout from here. At this point though, it needs some type of catalyst and right now it doesn’t exist. The support level at the $1450 handle is extraordinarily strong, and therefore it makes sense that we would continue to see this level be respected by the market overall. Therefore, a bounce makes more sense than not from a technical standpoint. All it takes now is some type of negative headline out of the US/China situation, and gold will be poised to take off to the upside. In the meantime, the next couple of weeks might be relatively quiet without that.
- 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.
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.
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
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.
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.
- S&P 500 still at all-time highs
- Crude oil continues to find buyers
- Gold crushed
- Bond markets sold off
Lately, we have seen more of a “risk-on” type of trading environment. The marketplace tends to move in highly correlated fashions, so keeping an eye on this can help trading, regardless of which market one specializes in.
For example, the USD/JPY pair is a highly sensitive currency pair when it comes to risk appetite. It tends to rise when traders are willing to take a bit more risk, as the Japanese yen is considered to be a major “safety currency”.
The global markets, as far as equities are concerned, have been doing quite well. It’s no secret that the United States stock markets have been very positive for some time, but we are starting to see some signs of hope in Asia as well.
In China, it looks as if the stock market is getting ready to break out, which would be a major boon for a “risk-on” type of trade going forward. That being said, the S&P 500, one of the major benchmarks for traders around the world, is still close to the all-time highs. Therefore, it has to be looked at through the prism of healthy earnings through that index.
The crude oil markets are all over the place, but when seen from a longer-term perspective, they are simply consolidating. Using the West Texas Intermediate Crude market as a benchmark, it’s plain to see that the market is hanging about between the $50 level on the bottom and the $60 level on the top.
This is typical behavior for the crude oil market as it does tend to be very technically driven. But at the end of the day, what it does show is that there are numerous headwinds and tailwinds at the same time out there for the global economy.
While the market is somewhat consolidating, what it tells us is that there isn’t exactly panic out there. Considering the oversupply of crude oil, that’s pretty significant as we are treading water.
The gold market has been sold off rather drastically. This is probably the biggest “risk-on” type of signal that has been shown in the marketplace lately. By selling off the way it has, it shows that traders aren’t trying to find as much in the way safety as they had been previously.
Granted, gold markets are still in an uptrend, but they certainly have taken quite a bit of a break recently, reaching as low as the $1450 level again.
Bond markets in the United States have sold off quite drastically recently too. That, of course, is a very good sign for risk appetite as well. Bonds are considered to be the “de facto risk-free asset” for the world, as as long as the US treasury market continues to find sellers, that’s an excellent sign of potential “risk-on” trading.
- Gold markets testing significant support
- The precious metal has sold off drastically
- Federal Reserve tomorrow
Gold markets have sold off again during the trading session early on Tuesday, as traders question whether or not the “risk-off” position is the trade that should be taken.
With the Federal Reserve coming out with a statement tomorrow, it is possible that they will disappoint the market. That will probably crush gold, as a lot of people are starting to bake in the idea of major quantitative easing.
The technical analysis for the gold market is rather interesting at this point, considering that the market is sitting near the $1485 level – an area that has offered quite a bit of support in the past. Beyond that, it is at the bottom of the “value area” of the 30-day volume profile. In other words, we are close to the bottom of “normalcy” over the last month.
It’s very likely that the next 24 hours will be very quiet until the Federal Reserve makes its announcement at 2pm Eastern Standard Time on Wednesday. When that announcement comes out, traders will be paying attention to not only the interest-rate decision, but also the accompanying statement. If it sounds hawkish, that could be the one thing that breaks this market down below the support just underneath and unwinds gold down to the $1470 level.
The alternate scenario could be that the Federal Reserve sounds very dovish. The market would then break above the $1500 level, which could open the door to a move for another $10 or so to the upside. At this point, it is a bit of a 50-50 trade, meaning things could get very dangerous for those who simply jump in with both feet.
It should also be noted that on the daily chart there is a bit of a bullish flag, but it is running out of time. If we can break out to the upside, it could send this market looking towards the $1800 level. That would make a bit of sense considering there is so much in the way of technical analysis, geopolitical concern, and loosening of central bank policy around the world, whatever the Federal Reserve does.
The trade going forward
The trade going forward in this market is probably best done an hour after the decision is made. This is because the lack of liquidity could throw the gold market around like a ragdoll heading into that announcement.
However, if the market does break above the $1500 level between now and then, it’s very likely that you could go ahead and pick up that $10 worth of move. Traders will be trying to “front-run” the announcement, as they do occasionally. Otherwise, sitting on your hands until seeing what the reaction is for a good hour after the announcement is the prudent thing to do.
- Gold markets in large flag
- Fibonacci ratios holding
- 50 day EMA moving at speed
Gold markets have been very active this year. They were gaining quite drastically until the last several weeks. Perhaps the pullback has been more or less a bit of digestion. The month of August alone was worth 15% in gains. That’s a huge move in any market, let alone Gold which is one of the larger contracts traders get involved with.
There are several trendlines worth paying attention to in the market. Not the least of which would be the two that make up the flag marked on the chart. Ultimately, the market will need to make a decision. While the flag is of the bullish variety, that doesn’t necessarily mean that it has to breakout. However, there are strong arguments to be made for breaking the top of it. This would be a very bullish sign, perhaps sending this market to $1650. After all, it would, in fact, be a clearance of a downtrend line. The measured move of the flag pole suggests that level as a target.
Other technical factors
There are other technical factors to take into account as well. The 50 day EMA is currently slicing through the last several candlesticks and flattening out. This is rather bullish when you think of the fact that the larger technical pattern is negative. As long as the 50 day EMA doesn’t slope lower, it does show the possibility that the market could break out. If that’s going to be the case, then the $18.75 level would be an area of interest as it was a recent high that tested that trend line. Ultimately, that would be the initial target on a breakout to the upside.
Another thing to pay attention to is that the market has accepted the 38.1% Fibonacci retracement level as support as seen by this triangle, so a break higher from here would tie-in quite nicely with Fibonacci trading in general. That being said, the exact opposite can be true as well, if that level gets broken it would signal much more bearish pressure in this market and have traders selling.
Keep in mind that the precious metals markets are often influenced by geopolitical concerns, and economic growth or weakness. There are a lot of things to worry about in general right now so the fact that precious metals could take off to the upside would not be a huge surprise.
The market has been in a long term trend to the upside for several different reasons, not the least of which would be central bank easing which shows no signs of slowing down. Just last night the Bank of Japan suggested that much more quantitative easing was coming out of that central bank, and the Federal Reserve, of course, is set to start cutting rates again in October. That being said, gold should have a relatively strong case for buying ahead. However, waiting for that downtrend line is going to be crucial. Otherwise, the market could break down rather drastically if the triangle kicks off, but so far it has avoided that.
- Major trend line holding market up
- Longer-term uptrend in sight
- Central banks continue to ease policy
Gold markets rallied a bit during the trading session on Wednesday, and we continue to see the uptrend line hold the market higher. It looks as if the gold markets will continue the overall uptrend, but the 50-day EMA just above could come into play. If that’s going to be the case, it’s likely that the next few days will be rather crucial.
Looking at the area that the market is in right now, it features not only an uptrend line, but also a couple of hammers in this general vicinity. With that being the case, it’s likely that buyers will be somewhat aggressive. There are also plenty of things out there to throw the market around.
At this juncture, the uptrend line will be crucial to pay attention to, and as long as the market is above that line, there is the possibility of holding an upward attitude.
Regardless, with the 50-day EMA just above and the wicks at the top of the previous handful of candles, the market should find some selling pressure. Ultimately, this is a market that will be news-driven more than anything else, as gold is considered to be a “safety market”.
The market going forward
The most important thing to pay attention to here is the overall trend. One must also note that the most recent value area has been found near the $1510 level, which means there are plenty of traders interested in the market in that area, providing a bit of upward pressure as well. It should also be pointed out that there is a little bit of a “gap” in volume above, and that should allow gold to rally rather quickly.
If the market was to break down below the uptrend line, it could open up the gold market to the $1450 level. This area has seen resistance in the past and could offer support based on the mid-century mark and, of course, the fact that it should bring in “market memory”.
However, it should not be forgotten that there are central banks around the world that continue to ease monetary policy. Naturally, there is a significant amount of fear when it comes to Brexit, the US/China trade relations, tensions in Syria, and a whole host of problems that could have money looking to gold for safety.
Buying on dips should, in theory, continue to work out. This is because, although lately the market has pulled back significantly, that was probably necessary to continue the overall upward momentum in a market that has been very bullish for quite some time.
- Potential trend line building
- 50-day EMA in the neighborhood
- Found support at previous hammer
Gold markets have been all over the place during the trading session on Friday as the United States and China continue to talk about trade. This will have a major influence as to where the market will be moving, as it gives us more of a “risk-on/risk-off” type of scenario. That being said, there are still plenty of reasons to think that perhaps gold should continue to rise.
Fundamental reasons for gold strengthening
Gold markets have multiple reasons to rise. For one, the central banks around the world are cutting interest rates and adopting more of a dovish attitude regarding monetary policy. It looks as if loosening monetary policy is simply going to continue going forward, which should drive currencies lower. That being said, the first question that a lot of people may ask is about the US dollar and whether or not it can strengthen simultaneously. Simply put: yes, it can, and it has rallied right along with gold quite often in the past.
With the concerns about the trade talks going on, and of course geopolitical concerns in the Middle East, there are ample reasons to think gold would be sought after as a safe haven. Yes, it has rallied far too much until recently, and it appears likely that a lot of this pullback has simply been a bit of profit-taking. Certainly, the sell-off hasn’t exactly been brutal.
Gold markets have formed a potential uptrend line and found quite a bit of support in the neighborhood they are trading in right now. Ultimately, this is a market that is finding buyers based on the breakdown. That’s because, although there were many tweets and headlines suggesting the world was coming together perfectly, it’s obvious that there are still a lot of cynics out there. Beyond all of that, the 50-day EMA is slicing right through the middle of the daily candlestick, which will attract a lot of attention in and of itself.
If we could get below the trend line, the $1460 level would offer support, but breaking down below there could open the door to the $1400. On the other hand, if the market was the gap above that point of control, then it would open up a move to much higher levels – perhaps even the highs that we saw recently.