December Gold Futures Test The 1850.0 Handle

Posted Thursday, November 19, 2020 by
Shain Vernier • 2 min read

It has been a quiet day on Wall Street, with sentiment slightly negative. Subsequently, risk assets are hovering near flat and the forex majors are seeing modest participation. At the midway point of the U.S. session, the DJIA DOW (-145), S&P 500 SPX (-10), and NASDAQ (+35) are showing small losses. One of the more active assets has been gold, which has lost nearly 1% on the day.

This morning’s economic releases were peripheral in nature. Here’s a look at the highlights:

Event                                                                         Actual             Projected           Previous

Initial Jobless Claims (Nov. 13)                                  742K               707K                  711K

Continuing Jobless Claims (Nov. 6)                          6.372M           6.470M             6.801M

Philadelphia FED Survey (Nov.)                                 26.3                  22.0                 32.3

Existing Home Sales Change (MoM, Oct.)               6.85M              6.45M               6.57M

Unfortunately, this group of figures suggests that the economy may be slowing down. Initial Jobless Claims are up by 31,000 week-over-week and the Philadelphia FED Survey is down significantly month-over-month. Both are indications that business sentiment is being impacted by new COVID-19 restrictions and uncertainty.

With no primary market movers scheduled for today, price action for many assets has been muted. However, we are seeing bearish action in December gold futures. At press time, prices have bounced from a key support level on the daily chart.

Bearish Gold Challenges Daily Triple-Bottom

December gold futures are in the midst of a three-day losing streak, largely on the heels of Monday’s Moderna vaccine announcement. Earlier today, prices rejected the Triple-Bottom pattern (1851.1-1848.0) on the daily timeframe. 

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

Overview: In a Live Market Update from 11 November, I outlined a short trade in December gold futures. The play turned out to be a winner, producing 100 ticks profit.

Now, gold is consolidating just north of the Triple Bottom formed in the vicinity of 1850.0. If we see this area taken out in the coming sessions, a major move toward $1800.0 is highly likely in the near future.

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