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Spot Gold Pulls back from the 200 Day SMA

Spot gold

For the most part, the widely traded spot gold futures contract looks positive as the U.S. dollar has weakened. However, gold prices have pulled back from the two hundred (200) day simple moving average. This area is also supported by the 61.8 percent Fibonacci level.

U.S. dollar traders are concerned about rising consumer prices in the United States. This has weakened the greenback and support non-fiat currency like spot gold.  The monthly consumer price index was boosted by rising energy prices.

With that the said, the U.S. central bank has no plans to raise rates or taper their monthly asset purchases. They also have no plans to alter monetary policy as they view this rise in inflation as transitory. Yesterday monthly U.S. factory gate price surged higher.

Today the United States will release key monthly core and headline retail sales data. The U.S. is also publishing monthly industrial production data and the University of Michigan is publishing their monthly initial consumer sentiment index. The European Central Bank will publish their monetary policy account. The UK will publish the private CB leading index.

Daily Spot Gold Technical Analysis                                                                   

Looking at price action on the above daily spot gold MT 4 price chart, traders are challenging the 50 percent Fibonacci level which lines up at $1,820 per ounce. The 14 day MACD momentum indicator is also sloping lower which indicates a possible downside correction in play.

A daily close below $1,820 opens the door to challenge the next layer of technical support lining up at $1,813 per ounce. The round and psychological number at $1,800 per ounce then comes into focus. Not pictured, and further down, is a rising trend line from 31 March. This downside barrier is at $1,792 per ounce.

On the upside, gold has immediate technical resistance in play at the 200 day simple moving average at $1,848 per ounce. The next upside barrier lines up at $1,851 before $1,875 per ounce comes into focus.

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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