Gold Remains Steady At Three Month High Above $1220

Gold for Monday, May 18, 2015

Gold enjoyed a solid week last week surging to a three month high above $1225 towards the end of last week. It has since consolidated a little and is now remaining steady above $1220. A couple of weeks ago, gold enjoyed support at $1180, which allowed it to rally back to $1190 and beyond to resistance at $1200. A few weeks ago, gold fell sharply back down through the key $1200 level down to below another support level around $1180, before dropping further to a six week low below $1170. To start that week, gold was trying to rally higher and regain lost ground from the end of the previous week, which saw it drop to near $1175. Over the last couple of months, gold has had an attraction to the key $1200 level, as every time it ventures away, it returns quickly to trade right around it.

Back at end of March, gold eased a little for a few days to below $1185, although for the best part of the last few weeks, gold has moved strongly off the support at $1150 and then found some new support from the $1200 level. Throughout the second half of February, gold enjoyed rock solid support from the key $1200 level, which held it up on numerous occasions. For about a month, gold drifted steadily lower down to a one month low near the key $1200 level before finding the solid support at this key level. At the beginning of December, gold eased lower away from the resistance level at $1240, yet again back down to below $1200. During the second half of November, gold made repeated runs at the resistance level at $1200 failing every time, before finally breaking through strongly. Throughout the first half of November, gold enjoyed a strong resurgence back to the key $1200 level, where it has met stiff resistance up until recently.

Throughout the second half of October, gold fell very strongly and resumed the medium term down trend, falling from above $1250 back down through the key $1240 level, down below $1200 to a multi year low near $1130. It spent a few days consolidating around $1160 after the strong fall, which has allowed it to rally higher in the last couple of weeks. Earlier in October, gold ran into the previous key level at $1240; however, it also managed to surge higher to a five week high at $1255. In late August, gold enjoyed a resurgence as it moved strongly higher off the support level at $1275. However, it then ran into resistance at $1290. In the week prior, gold had been falling lower back towards the medium term support level at $1290; however, to finish out last week, it fell sharply down to the previous key level at $1275.

Gold futures closed up modestly on Friday, logging their biggest weekly gain since mid-January as soft U.S. consumer sentiment data weighed on the dollar and further diminished expectations for a near-term rise in U.S. interest rates. U.S. gold futures for June delivery closed up 10 cents at $1,225.30 an ounce, up 3 percent on the week. Spot gold was up 0.2 percent at $1,224 an ounce. The dollar eased against the euro in the wake of the report, allowing gold to extend a three-day rally that took prices to their highest since mid-February on Thursday at $1,227.04. Recent economic reports have supported market expectations that the economy is not strong enough for the Fed to start raising record-low rates from June. Data released on Friday showed U.S. consumer sentiment fell more than expected this month, though an earlier report showed manufacturing activity growth in New York state accelerated in May after weakening for three consecutive months. “If the data remains soft in the United States, this rally has potential,” Commerzbank (XETRA:CBKG) analyst Eugen Weinberg said. “When data is more on the soft side, the market will be looking for indications on when the Fed will be raising interest rates.”

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(Daily chart / 4 hourly chart below)

Gold May 18 at 03:30 GMT 1222.9 H: 1225.5 L: 1221.7

Gold Technical

During the early hours of the Asian trading session on Monday, gold is consolidating right above $1220 after its recent surge higher. Current range: trading right above $1220.

Further levels in both directions:

• Below: 1180 and 1150.

• Above: 1240 and 1300.

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