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Gold Trades below $1,800 per ounce as Dollar Recovers

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Last week, the popular spot gold futures contract started off calm over the first two trading days. The spot contract was trading in a narrow range above $1,750 per ounce. Then the yellow bullion gained ground as U.S. Treasury bond yields fell lower.

The spot (XAU/USD) contract then moved higher gaining two percent on Wednesday to a new monthly high price and above $1,800 per ounce before reversing and falling lower. As U.S. Treasury yields moved back lower, pushing the dollar lower, however gold losses were capped. The spot contract finish the week around $1,770 per ounce.

Monday’s economic calendar is fairly quiet. China will publish their quarterly gross domestic product as well as monthly retail sales numbers. Japan will publish their monthly producer price index (PPI) and monthly machine tool orders. The United Kingdom, euro area and United States have no economic data scheduled for publication. Several U.S. Federal Reserve members will give commentary.

Traders will look for guidance on when the U.S. central bank will begin scaling back monthly asset buys. The Federal Reserve could begin tapering by November.

Daily Spot Gold Technical Analysis (XAU/USD)

Looking at the above daily MT 4 price chart, the 14 day relative strength index (RSI) is around the mid-point. This signals possible indecision with gold buyers. The 14 day MACD histogram is also looking negative as buyers seem to be running out of steam.

Initial technical support lines up at former resistance at $1,770 per ounce. A daily close below this level opens the door for the 20 day simple moving average near $1,760 per ounce before challenging $1,750 per ounce next.

On the upside, the fifty (50) day simple moving average lines up near $1,780 before the key barrier of $1,800 per ounce which is at the 50 percent Fibonacci level. The next upside barrier is in play at the 38.2 percent Fibonacci level. This resistance layer lines up at $1,825 per ounce.

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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