Gold: Drops Sharply Back Below $1200

 | Dec 16, 2014 12:36AM ET

Gold for Tuesday, December 16, 2014

The last week has seen gold ease lower away from the resistance level at $1240 back down to find support at $1220 however in the last 24 hours it has fallen sharply back through the key $1200 level. Gold enjoyed a solid surge higher up from the key $1200 level to a new six week high just shy of a previous resistance level at $1240 earlier last week. Gold has had a fascination with the $1200 level over the last month which has seen it trade either side of this level, and sure enough, it has returned back there again. During the second half of November gold made repeated runs at the resistance level at $1200 failing every time, before finally breaking through strongly. Since that time it has returned to back above $1220 before easing lower. 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.

During the second half of June, gold steadily moved higher but showed numerous incidents of indecision with its multiple doji candlestick patterns on the daily chart, around $1320 and $1330. At the beginning of June, gold did very well to repair some damage and return to the key $1275 level, then it has continued the momentum pushing a higher to its recent four month high. After moving so little for an extended period, gold dropped sharply back in May from above the well established support level at $1275 as it completely shattered this level falling to a four month low around $1240. It remained around support at $1240 for several days before its strong rally higher. It pushed down towards $1280 before sling shotting back and also had an excursion above $1300 for a short period before moving quickly back to the $1293 area again.

Gold fell more than 2 percent on Monday, after posting its biggest weekly gain in two months, as the dollar firmed before a Federal Reserve meeting that could provide clues on the timing of a possible interest rate rise by the U.S. central bank. The Fed’s meeting on Tuesday and Wednesday follows data pointing to a strengthening economy, which could sharpen the case for the central bank to take a more hawkish stance. A sooner-than-expected rise in interest rates could boost the dollar and hurt non-interest-bearing bullion. Spot gold fell to a session low of $1,191 an ounce earlier and was down 2.4 percent at $1,993 an ounce. The metal climbed 2.6 percent last week, its largest such increase since October but investors were cashing in recent gains after gold failed to breach key resistance convincingly at $1,235. U.S. gold for February closed $14.80 lower at $1,207.70 an ounce. The dollar rose 0.2 percent against a basket of currencies, still underpinned by positive U.S. data last week. The latest upbeat evidence came on Friday when the Thomson Reuters/University of Michigan index of consumer sentiment jumped to a near eight-year high for December.

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Gold December 15 at 22:25 GMT 1193.1 H: 1224.4 L: 1190.8

Gold Technical

S3 S2 S1 R1 R2 R3
1200 1130 — 1240 1255 —

During the early hours of the Asian trading session on Tuesday, Gold is trying to claw its way back to the key $1200 level after dropping sharply back down to $1190. Current range: trading above $1190.

Further levels in both directions:

• Below: 1200 and 1130.

• Above: 1240 and 1255.

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