October 30, 2017
As of 4 o’clock EDT, gold futures are trading up $5.50 on the day, with December’s futures contract currently fixed at $1,277.30. This marks the second day of higher pricing in gold.
More importantly, the lows seen on Friday match almost precisely to recent lows when gold traded to $1,263 on October 6th. These lows match the lows that were achieved on Friday and, in essence, created a double bottom in gold pricing.
Add to that the fact that $1,263 per ounce in gold is exactly a 61.8% retracement of the major rally which occurred from the first week of July and concluded on September 8, when gold prices reached this year’s high at $1,362 per ounce.
It is for that reason that the price point of $1,263 is a critical support area. This could be an indication not only of price support at $1,263 but higher pricing in gold in the next few weeks.
Much of the recent strength or weakness seen in gold pricing has been directly attributable to the U.S. dollar. Today dollar weakness has been instrumental in supporting stronger gold pricing. The U.S. dollar index is currently trading at 94.33, losing 49 points on the day (-0.52%).
Physical gold is fixed at $1,275.70, a net gain of $2.50 on the day. According to the Kitco Gold Index (KGX), a weak U.S. dollar is adding $4.70 worth of value today, with normal selling taking gold pricing down $2.20 on the day resulting in its current price of $1,275.70.
Dollars sentiment has been reacting to the upcoming appointment by President Trump of the next Federal Chairperson. Currently, the odds are favoring Jerome Powell as the next head of the United States central bank.
As reported by MarketWatch, Marshall Gittler, chief strategist at ACLS Global, “Expectations that he may choose Fed Gov. Jerome Powell have been weakening the dollar, since Powell is seen as more dovish than the other major candidate, academic John Taylor. There has been speculation that perhaps Trump will appoint one to the chair and the other to the vice chair position, a compromise that might work out well – and probably would boost the dollar, in my view.”
Only time will tell if market participants and traders are able to move gold pricing higher this week, as well as whether recent price lows of this double bottom will hold. The one thing that can be said is regardless of future action, price action forming the double bottom would be a necessary component in identifying technical support.
For those who would like a deeper analysis, simply use this link.
Wishing you as always, good trading,