Summary:
- Gold closed lower last week after 5 consecutive gains
- Price close to falling trendline going back to 2013
- US GDP set to be released on Friday at 1:30PM
Ever since the Fed raised rates in the middle of December there’s been a steady bid behind the price of Gold with the market moving back above the 1300 handle to reach its highest level in more than 4 months.
However, there was some resistance found around 1340-45 which sellers managed to defend and last week saw a red close for the first time in 5 weeks. Taking along term view of the market last week’s highs take on an even greater significance as they coincide with a falling trendline going back to August 2013. This trendline has been tested on 3 previous occasions and each time the market turned lower shortly afterwards.
Gold hit a 4-month high last week but the market ended lower, breaking a sequence of 5 consecutive weekly gains. Source: xStation
An extended evening star of sorts can be seen on a D1 chart, with the surge higher on Friday 12th Jan being followed by two indecisive candles before a strong decline last Wednesday. The weekly low of 1325 could offer support but a break below here would pave the way for a sustained move lower.
1325 may offer support and 1344 potential resistance. Source: xStation
On the other hand the recent highs of 1344 coincide with the longer term falling trendline and a break above here would be a major positive development for the longs. This could lead to a large breakout rally to the upside and may mark the end of a bottoming out period that has lasted around 4 years now.
In terms of market moving events this week keep an eye on the US government shutdown, which whilst not a big story at the moment could develop into one should it continue for a prolonged period. On the economic data front Friday see the US Advanced GDP released for the final quarter of 2017 – this could also have a big impact on the USD and the price of Gold.