Gold: Still Trying To Rally Back To Key $1240 Level

 | Feb 17, 2015 01:14AM ET

Gold for Tuesday, February 17, 2015

Over the course of the last three weeks gold has drifted steadily lower down to a one month low around $1220 before rallying a little higher back towards $1230 to finish last week. To start this week it has rallied a little further only to run into some resistance around the key $1240 level. With the exception of the last few weeks, gold has enjoyed a very solid few weeks to start the year which has seen it surge to a five month high near $1308, before reversing and moving back under $1240 over the last couple of weeks. It presently finds itself trading in a narrow range right above $1230 with eyes on $1240. A few weeks ago gold eased back a little and steadied below the $1280 level after surging to that area and a four month high, before its recent strong surge higher.

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 rose for a third straight session on Monday, as the dollar weakened before a meeting of euro zone finance ministers on how to proceed with Greece’s bailout programme. Spot gold rose 0.3 percent to $1,233.60 an ounce by 1059 GMT, while U.S. gold for April delivery was up $6.10 at $1,233.20 an ounce. Liquidity is seen thinning through the day due to a national holiday in the United States. Spot gold posted its third weekly drop last week, undermined by bearish investor sentiment and prospects of higher U.S. interest rates. “Gold recovered last Friday after disappointing U.S. data and it is relatively well supported, given the still ongoing risks in Greece,” Commerzbank (XETRA:CBKG) analyst Daniel Briesemann said. “Liquidity will be relatively low today in the absence of U.S. players and during the rest of the week, with Chinese players out of the market from Wednesday.” The dollar fell 0.3 percent against the euro and European stocks steadied as euro zone finance ministers, together with European Central Bank President Mario Draghi, resume talks at 1400 GMT.

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(Daily chart / 4 hourly chart below)

Gold February 16 at 22:10 GMT 1231.2 H: 1237.2 L: 1227.5

Gold Technical

S3 S2 S1 R1 R2 R3
1200 1170 — 1240 1300 —

During the early hours of the Asian trading session on Tuesday, Gold is trading in a narrow range right above $1230 after remaining quite steady to finish out last week. Current range: trading right above $1230 around $1231.

Further levels in both directions:

• Below: 1200 and 1170.

• Above: 1240 and 1300.

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