The Next Key Levels For Gold

posted in: Gold, Gold Stocks | 0

Gold has staged an impressive ~$90/oz rally during the last 3 weeks. However, some consolidation between the flat 200-day simple moving average and the round number psychological $1200 level could be in order:



The rally has stalled at the 50% retracement of the entire 2015 decline from $1307.80/oz in January to the July low at $1072.30. Moreover, the last two daily candlesticks have formed a potential ‘tweezers top’ which could be confirmed with a lower close today. $1176 now becomes the nearest support level (long-term support and 200-day SMA). Above $1190 the next levels of significance are the May high at $1232 followed by the January high and double-top at $1308.

Gold futures positioning has become less constructive in recent weeks as hedgers have steadily begun adding to hedges after reaching a bullish extreme during the summer:



Finally, seasonal tailwinds should be supportive of gold through year end (November and December are two of the most bullish months of the year for gold historically) despite some signs of the yellow metal being short term overbought and less constructive futures positioning.