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- Gold Technical Strategy: Intermediate-term: Choppy with range-like characteristics.
- Gold prices have failed at resistance around $1,243 on two separate occasions over the past two weeks.
- If you’re looking for trading ideas, check out our Trading Guides. They’re free and updated for Q1, 2017. If you’re looking for ideas more short-term in nature, please check out our Speculative Sentiment Index Indicator (SSI).
In our last article, we looked at Gold prices trading at a key support zone after the first day of Fed Chair Janet Yellen’s Humphrey-Hawkins testimony. As we wrote, the fact that Gold prices remained within support while the Dollar was surging-higher was potentially troublesome for Gold bears. If what we were seeing at the time was a legitimate ‘rate hike fears’ theme, Gold prices likely would’ve seen a deeper test below that support zone, or, at the very least, a more feeble attempt by buyers at quelling those short-term losses.
The second day of Chair Yellen’s testimony wasn’t quite as boisterous for Dollar bulls, as a reversal began in the Greenback that catapulted Gold prices right back up to the resistance zone around $1,243. This zone of resistance had also functioned as a pivotal support swing in October, just ahead of the ‘Trump Trade’ that drove Gold prices lower by more than $210 in the following seven weeks.
But ever since the Fed hiked rates in December, matters haven’t been the same for Gold traders. Gold prices set a fresh low the day after that rate hike, and have since spent most of the time trending-higher. This further illustrates that Gold prices do not appear to be buying the Fed’s rate hike plans, as the bank has continued to persistently claim that they’re looking at approximately 3 rate moves this year, yet Gold prices continue trending-higher.
Chart prepared by James Stanley
Moving forward, traders looking at momentum-based strategies will likely want resolution of this range-like price action before proceeding further. On the top-side of price action, a break above $1,245 could open the door for bullish-trend strategies, while a down-side break below $1,215.17 could bring on bearish-breakout strategies. In between these two prices – be careful, as price action has been very choppy in this region of recent.
Chart prepared by James Stanley
--- Written by James Stanley, Strategist for DailyFX.com
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