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1850.0 Holds For December Gold Futures

Posted Monday, September 28, 2020 by
Shain Vernier • 2 min read

Last week was a rough one for gold bugs as prices plunged nearly $100 per ounce. Concerns over the broader market outlook and a sudden rally in the USD brought on an unexpected drop in bullion. Now, bargain hunters have stepped in and bid the yellow metal higher. Subsequently, December gold futures have rejected the 1850.0 handle and look poised to revisit 1900.0.

As we mentioned earlier, there wasn’t much scheduled on today’s economic calendar. The weekly 3 and 6-Month U.S. T-bill auctions brought static yields as investors turned their attention to stocks. Perhaps the biggest highlight from this morning was release of the Dallas Fed Manufacturing Business Index (Sept.). The figure came in at 13.6, well over August’s number of 8.0. While still beneath pre-pandemic levels, the Dallas Fed Index does show that business is picking up in Texas, as it is in many U.S. regions.

When looking at the big picture, it appears that the COVID-19 recovery is progressing. This has been good news for stocks as are hopes regarding a vaccine coming online in the near future. Both issues have contributed to gains in equities, WTI oil, and December GOLD futures as the USD pulls back from last week’s highs.

December Gold Futures Drive At 1900.0

At press time (about 1:45 PM EST), December gold futures are up nearly $18 per ounce on the day. Following an early session rejection of the Spike Low (1851.0), bidders have dominated the market.

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

Going into the Tuesday session, there are two levels to keep a close eye on:

  • Resistance(1): 38% Current Wave Retracement, 1901.7
  • Support(1): Spike Low, 1851.0

Bottom Line: For the moment, December gold is trending north. If we see further bullish extension, a selling opportunity may come into play for tomorrow.

As long as the Spike Low remains the short-term bottom of this market, I will have sell orders in the queue from 1901.1. With an initial stop loss at 1906.1, this trend-following trade produces 100 ticks on a 1:2 risk vs reward ratio.

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