Gold To Close Week On A Down Note

In several updates from earlier this week, the team at FX Leaders broke down the consolidation patterns emerging in the gold markets. From an ascending flag formation to a daily pennant, it was fairly evident that bullion was going to breakout ― the only thing needed was a timely nudge. Well, Thursday’s comments from NY FED President Williams ended up being the primary catalyst in a bullish run in GOLD.

Of course, what goes up, must come down. Today has brought a major retracement in the yellow metal, with values falling more than $25 from intraday highs. As of press time (1:45 PM EST), it appears that gold will close the week on a down note.

August Gold Futures Test $1450 Before Reversing

All in all, July has been a tight month for August gold futures. Prices have been compressed a majority of the time, due in large part to debate over pending FED rate cuts. Perhaps late-July will bring heightened price action and trading opportunities to bullion.

Here are two levels to watch in this market for the near future:

• Resistance(1): Spike High, 1454.4
• Support(1): 38% Of July’s Range, 1427.8

Overview: The volatility of the past 24 hours is indicative of just how sensitive investors are at the present time. Amid Brexit, a dovish FED, trade wars, and the approaching 2020 U.S. electoral cycle, angst is at yearly highs. This behavior runs contradictory to the current lofty U.S. equities valuations ― there simply aren’t many people comfortable in the market right now, despite prevalent trends. The sudden whipsaw action in gold over the past 24 hours is strong evidence that the markets are extremely tentative at the moment.

For now, a bullish bias remains valid for bullion. Prices are in the neighborhood of the 38% Retracement of July’s Range and still above downside support. Until we see a correction to the 1375.0 area in August gold, it is long-or-nothing for this market.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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