Gold Technical Analysis – WC 10th December
- Gold closed around 0.64% lower on the weekly basis as the precious metal finished trading close to the $1700 area in New York late on Friday. This comes on the back of a week dominated by central bank decisions from around the world including the UK, Australia, Canada and the Eurozone. The downgrade of Eurozone growth projections has seen the EUR/USD trade well below the key 1.3000 handle and the dollar gain accordingly.
- From a technical analysis perspective, we note that the price of gold broke below the key $1700 per oz level this week with a low of $1683.23 (XAUUSD) hit after an inside day breakout to the downside triggered on Friday. This followed the better-than-anticipated US employment data (non farm payrolls). The US added 146k jobs in November versus a widely estimated of 85k with the unemployment rate falling to 7.7% from 7.9%.
- Price quickly found support just above the previous 1672.54 swing low, from 5/11/12, and has subsequently moved back above $1700 handle as the week drew to a close, thus forming a “bullish outside day” and “inside day false breakout” in the process.
- A range trading scenario may be seen unless a fresh catalyst is found, especially as we are heading into the year end which is often associated with lower volatility and lower volumes (all else being equal).
- In the mid to long term, the price of gold could continue to see supportive price action as long as QE remains a focus and at present there is no end to this in sight.
Gold has been a major beneficiary of monetary easing measures from leading central banks, including the US Federal Reserve. However, if the key $1800 area resistance is not broken, sentiment towards the precious metal may once again turn and bring associated selling pressure.
- We do however note that the dollar index printed a weekly bullish outside candle price action formation and any extended USDX strength may weigh on the precious metal.
Gold Technical Analysis Update, Week Of 10th December