Talking Points:

  • Gold prices rally to start Monday trading
  • Technically Gold is in a short term uptrend, despite long term pressures
  • Sentiment Figures remain off of extremes, reading at +1.74

Gold prices are rising to start Mondays trading, and may attempt to make a move towards last week’s high of $1,185.04. This resumption of upward momentum continues with a traditionally seasonally strong January for Gold. Fundamentally there is little in the way of news set for this week, with the highlight being Fed –speak set for Thursday. Despite lack of news on the economic calendar, traders should continue to monitor key technical values to determine if Gold prices may continue to trade higher or turn throughout the week.

Technically gold prices remain bullish in the short term above support found at $1,162.41. The next key value of resistance for the metal remains, last Thursday’s high of $1,185.04. A breakout above this value would suggest a continued retracement in a long term downtrend for the metal. With gold remaining beneath long term beneath its daily 200 MVA (moving average) traders may look at this short term bullish move as counter trend. If prices stall near present levels it may suggest that the commodity is set to resume back in the direction of its primary bearish trend.

Gold Prices Rally to Begin Trading Week

(Created Using TradingView Charts)

Intraday, gold is currently attempting breakout higher above today’s R4 pivot at $1,178.84. A breakout here would clear the way for the metal to retest intraday highs above $1,182.02 and then the previously mentioned value of daily resistance. In the event that a false breakout develops, bearish reversals may be signaled beneath $1,175.48. It should be noted that in a bearish scenario, key values of support include $1,168.91 and $1,165.43.

Gold Prices Rally to Begin Trading Week

(Created Using TradingView Charts)

Lastly, Sentiment values for gold remain off of extremes, with SSI reading at +2.56. This total places 72% of positioning long gold, and 28% short. This reading lends itself to a slightly bearish bias. If gold prices begin to turn lower, traders may look for SSI figures to increase as well, and potentially reach an extreme value of +3.00 or more. In the event that prices rally from present values and breakout to a new high, it would be expected to see SSI retreat and move back towards a more neutral reading.

Gold Prices Rally to Begin Trading Week

--- Written by Walker, Analyst for DailyFX.com

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