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Gold Looks Indecisive below $1,800 per Ounce


The popular spot gold futures contract has been on a bit of a ride as has the U.S. dollar. The spot contract saw solid gains last Wednesday before consolidating gains. Then the yellow metal spiked above $1,800 per ounce on Friday before retracing some gains during the North American trade session to close above $1,790 per ounce.

The U.S. Federal Reserve is preparing global financial markets for immediate tapering, possibly beginning in November, of their monthly asset purchase program which currently stands at $120 billion per month of Treasuries and mortgage backed securities. However, their Fed Funds Rate (FFR) will remain at effective zero for the foreseeable future.

Today’s economic calendar will be about euro area key sentiment surveys from the German based Ifo economic institute. The Ifo economic institute will release their monthly German business climate survey. They will also publish their current assessment survey for Germany. The United States has a couple items on Monday’s economic calendar, as well. 

The world’s largest economy will release the monthly Chicago Federal Reserve national activity index.  The Dallas Federal Reserve will release their monthly manufacturing index survey. The United Kingdom’s economic calendar has key economic releases scheduled for Monday.

Daily Spot Gold Technical Analysis

Looking at the above daily MT 4 price chart, the 14 day relative strength index (RSI) has moved higher above the mid-line towards sixty (60). This could be a good sign for spot gold buyers. Right now, the spot XAU/USD contract needs a daily close above $1,800 per ounce for a decisive move higher.

 If this happens, the spot contract could move towards the 100 and 200 day simple moving averages. The next upside level lines up the 38.2 percent Fibonacci level at $1,830 before the key upside barrier at $1,840 per ounce.

On the downside, the 50 day simple moving average lines up at $1,780 per ounce before the former resistance now support at $1,770 comes into focus. This is also near the 61.8 percent Fibonacci level.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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