Long-Term Levels For December Gold - Forex News by FX Leaders
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Long-Term Levels For December Gold

Posted Saturday, September 7, 2019 by
Shain Vernier • 2 min read

Since early May, bullion has been on a bullish tear. Values have risen by almost $300 per ounce, with no significant pullbacks. Traders have bid December gold futures at every juncture ― is $2000 a possibility by U.S. Election Day, 2020?

While no one knows for sure just how high gold will go, it is tough to deny its recent strength. Much to the surprise of many market professionals, the vaunted $1500 level has attracted bargain hunters each time it is tested. This is a level that has not been traded in several years; the fact that it is now robust support is a critical underpinning of the entire gold market.

So, where is bullion headed for the remainder of 2019? Let’s dig into the long-term technicals for December gold futures and see if we can put things into a manageable context.

December Gold Futures: Weekly Outlook

The origins of gold are fascinating. Modern physics suggest that the yellow metal came to this planet as a meteor bombardment, some 200 million years ago. As traders that story doesn’t matter much; but, it does give us an idea why there isn’t a whole lot of the stuff to be found!

December Gold Futures (GC), Weekly Chart
December Gold Futures (GC), Weekly Chart

A few observations from the December gold weekly chart:

  • Since early May, we have only seen 4 losing weeks. This is key, as the last two have been negative. While far from a significant pullback, we may be in the initial stages of a solid retracement.
  • The Bollinger MP crossed over the Weekly SMA during the third week of June. Since that time, price has rallied more than $125 per ounce. 
  • In addition to the crossover, the Bollinger MP and Daily SMA are running nearly parallel. This occurrence suggests that the throttle is wide-open and the uptrend is strong.

When you add together these three technical factors, an overwhelming bullish bias is warranted. For the coming fall season, there is one important support level that has set up just this week:

  • Support(1): 38% Fibonacci Retracement Of May/August Bull Run, 1458.8

The 38% May/August retracement is a key area ― as long as the current Swing High at 1566.2 holds, 1458.8 is best respected as robust support. In short, the uptrend in December gold will remain valid as long as trade is sustained above this level.

Overview

Over the past several months, institutional capital has begun stockpiling bullion as a hedge against the unknown. Brexit, the U.S./China trade war, and the 2020 U.S. Presidential Election are the primary drivers of investor angst. Subsequently, the summer months have brought bidders to December gold in mass.

So, what does the fall season hold? In my opinion, I think we are looking at more of the same. GOLD will very likely continue to show strength as there is no immediate resolution to any of the fundamentals mentioned above. However, with a bit of luck, we will get a chance to buy a nice dip and join the bullish intermediate-term trend.

If you are trading December gold, keep an eye on $1458. Should the market test this area in the coming weeks, going long is a great way to get in on the action.

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About the author

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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