Gold Price Analysis: XAU/USD recaptures $1900, doors open towards $1912 – Confluence Detector
Gold (XAU/USD) has cleared the $1900 level on Monday, surging 1% to reach over one-week highs. The extension to the last week’s rally comes on the back of a much-awaited US fiscal stimulus deal. US Congress reached an agreement on a $900 billion COVID-19 relief aid package on Sunday, with votes likely on Monday.
Gold also benefited from the coronavirus-induced fresh lockdowns imposed globally, defying the strengthening haven demand for the US dollar. Heading into the holiday-shortened Christmas week, let's see how is gold positioned on the charts.
Gold Price Chart: Key resistances and supports
The Technical Confluences Indicator shows that the XAU/USD pair has finally taken out the key $1900 level, which was the confluence of the Pivot Point one-day R3 and Bollinger Band four-hour Upper.
The buyers now target the $1907 barrier, where the SMA100 one-day coincides with the Pivot Point one-month R1.
The next resistance awaits at the Pivot Point one-week R1 of $1912. Acceptance above the latter could open doorways to heaven.
On the flip side, a breach of the $1900 support could put the $1896 cushion at risk. That level is the previous week high.
Minor support is seen at $1892, which is the convergence of the Bollinger Band one-day Upper and 15-minutes Lower.
Bears will then eye a sustained move below $1888, the intersection of the Fibonacci 61.8% one-month and Pivot Point one-day R1, to accelerate the downward pressure.
Further south, the next relevant support is aligned at $1883, which is the Fibonacci 38.2% one-day.
· Gold investors need the important price perspective provided by a longer-term chart
etals market watchers who trade/hedge in futures need to pay close attention to the longer-term weekly and monthly continuation charts for nearby futures. History shows that strong-trending markets tend to see their prices gravitate toward historical highs or lows that are depicted on the weekly and monthly charts. Longer-term charts also tend to weed out the sometimes distracting “market noise” that can be seen on the shorter-term daily charts. Let's take a look at the monthly continuation chart for nearby Comex gold futures, as it is providing some important technical clues.
It's easy for a gold market bull to get frustrated by market noise that occurs in day-to-day price action—especially if a near-term price downtrend develops. However, the longer-term monthly continuation chart for nearby Comex gold futures shows prices have been in a longer-term price uptrend since 2015.
Bulls have just recently gained some near-term technical strength by starting a fledgling price uptrend. The next major upside target for the gold market bulls is pushing prices above solid chart resistance at the 2011 high of $1,920.70 an ounce. If prices push above that level then a move to the record high of $2,063.00, scored in August of this year, or above, is very likely.
Importantly, the monthly gold chart shows that the recent pullback in prices from the August record high is not at all extreme and is arguably a normal longer-term corrective pullback in the existing price uptrend. And the existing longer-term price uptrend suggests that price action in the coming months will remain sideways to higher, on a longer-term chart basis. That's positive news for the buy-and-hold gold investor.
Separately but still somewhat related to gold, a feature in the marketplace in December has been a strong surge in Bitcoin prices to a new record high. This newer investment vehicle has been getting mixed reviews from the overall marketplace. Some are calling Bitcoin the new gold. Some TV advertisements are portraying those who hold gold as a safe-haven asset as being behind the times. The other side of that argument says that when times get really, really uncertain, is the rattled investor going to be comfortable holding an asset that can only be seen on his computer screen when the internet is in service. The jury is still out on that matter.
One thing that's important to point out regarding Bitcoin's recent price action: It's gone “parabolic” in trading parlance—meaning a nearly straight up price move. Any time a market does such it's a warning signal that from a time perspective a market top is likely coming sooner rather than later.
· Daily FX - Gold and silver prices getting liquidated
· Gold: Try longs at 1866/64 with stops below 1860
Gold – Silver
Gold Spot longs at 1845/50 worked perfectly hitting our targets of 1864/66 & strong resistance at 1888/92. Another great call as we topped at 1895.
On Friday we wrote: Downside is expected to be limited with minor support at1879/77.
We bottomed exactly here.
Silver Spot we bought on the break above 24.90, with our buy signal targeting 25.05,25.25/30, 25.50 & the November high at 25.95/99. All targets hit with longs offering up to 100 points profit last week.
We saw profit taking on Friday as predicted but held 10 points above the first support at 25.50.
Daily Analysis
Gold topped at strong resistance at 1888/92 exactly as predicted. We bottomed exactly at minor support at 1879/77 on Friday & we do continue to expect the downside to be limited. Try longs at 1866/64 with stops below 1860. Try longs again at 1850/45 with stops below 1840.
Strong resistance at 1890/95. Bulls need a break above 1905 for the next buy signal targeting 1916/18, perhaps as far as 1922/24.
Silver longs on the break above 2490 & we topped exactly at the November high at2595/99. A break higher is a buy signal for the start of this week targeting 2660/70 &2710/20. If we continue higher look for 2755/65.
· Gold Trend 21/12 - 24/12 (review daily)
Gold price continued to become motivated last week by the hope of the new U.S COVID-19 aid bill with an overall surged of 2.2%. The price is running well within an M-T uptrend channel (1) on the daily chart , current resistance at $1890 (2).
The weekly high was set on Thursday last week on the 1 hour chart. A S-T downward resistance (3) has formed in the past 48 trading hours, expecting a minor break out in Asian or European session today. S-T range will be at $1880-1892 or a downslide toward 1870-68.
S-T Resistance: $1890 / $1897-$1900
S-T Support: $1880 / $1870-$1868
· Physical gold in India was sold at a discount last week for the first time in six weeks as a rebound in local prices squeezed demand, while purchases slowed in other Asian hubs ahead of the year-end holidays.
· Russia’s gold reserves stood at 73.9 million troy ounces as of the start of December, the central bank said on Friday.
· Hedge funds and money managers raised their bullish positions in COMEX gold and silver contracts in the week to Dec. 15, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
· Silver rose 0.9% to $26.01 per ounce. Platinum was up 0.1% at $1,036.75 and palladium fell 0.1% to $2,358.71.
· Dow futures drop 300 points
Stock futures traded in the red early Monday as Congress managed to seal a coronavirus stimulus deal hours before a shutdown deadline.
Futures on the Dow Jones Industrial Average pointed to an opening drop of 300 points. S&P 500 futures and Nasdaq 100 futures both traded lower. At Monday’s open, Tesla will enter the S&P 500 with a 1.69% weighting in the index, the fifth largest.
Reference: CNBC, KITCO, Trading View, FXStreet, DailyFX
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