CommoditiesTrader

Gold Trends Near Resistance After Consecutive Session Gains

FX:XAUUSD   Gold/U.S. Dollar
Currently, gold             is budding up against intraday resistance, following two consecutive sessions of gains on a weaker dollar. As the rate hike came and went, many – even those who ushered in the hike with excitement – are beginning to wonder if the Federal Reserve waited far too long to boost interest rates.

The yellow metal had began its two-day rally by finding bidders on the weekly support level of $1,046. Even though gold             has seen nice gains following the FOMC, the paradigm has been to sell rallies despite whether or not it fundamentally makes sense. According to the Commitment of Traders data, large speculators are the most short gold             ever.

This could cause for a disastrous 2016 for hedge funds if fundamentals for owning gold             improve, as we have already seen what happen when crowded trades unravel in the euro             .

On the four-hour chart, gold             is hovering just under $1,080 and the 200-4H EMA, which will act as dynamic resistance until a confirmed breakout occurs. Price action is trading at the upper-end of a symmetrical triangle, while a minor descending support within the pattern is found (dotted line). Within the pattern, support is found at $1,074 and $1,066, while a confirmed breakout could signal a move higher to $1,088 and $1,095, potentially $1,111, per ounce.

If gold             prices do see selling pressure and close beneath trend support, weekly support levels will remain key. $1,000 and $955 are technical targets.

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Related Ideas

kopparam
a year ago
snapshot
+1 Reply
CommoditiesTrader kopparam
a year ago
Very interesting. Not too familiar on harmonics, but I do find it interesting as D is where my potential third near term level is. Thank you for the chart!
Reply
butmort
a year ago
A very good short and sweet summary of where gold is at, what lies ahead in both directions and with real interest rates negative(irrespective of Fed inflation releases), your suggestion of a crowded short EUR/USD whipsaw repeat is definitely on the cards.
With the Fed behind the curve, an analogous herd mentality (including those who see gold as a useless anachronism to be sold for some of the US$4.8 trillion of Fed Bal sheet funds that are sloshing around.... before the liquid lot face an unprecedented herding themselves within the foreseeable future) appears to be fermenting as many jump aboard the short-gold bus that may prove to be an expensive trip to nowhere
+1 Reply
CommoditiesTrader butmort
a year ago
Thank you for comment, and yes there is a bigger picture. Far too often is the short term overrides the longer objective. But those that laugh at cheap protection weren't laughing in 2009. The whole point is to buy it cheaply, right.

One of the best ways to hedge central banks IMO. Funny thing was that hedge funds, who are shorting hand over fist, were the most net long in 2011 when gold topped.
Reply
butmort CommoditiesTrader
a year ago
I concur CT and reflect upon when the Bank of England and the Reserve Bank of Australia sold the lion's share of their gold holdings respectively at very close to proximate gold market lows, albeit at different times. The robust performance of gold and silver post the Fed's first interest rate rise may be a harbinger of better things to come for precious metals. Negative real interest rates and outlook provide the fuel to fire up gold and silver. Keep up the superb work, it's much appreciated.
+1 Reply
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