Gold 150105 – New Year, new prospects

Gold this week:

150102-gold-weekly

Gold futures – weekly

Expectations for the timing of the first Fed rate hike continue to influence the GOLD price. The focus this week will now be the December non-farm payrolls report on Friday. The jobless rate is expected to hold steady at 5.8%.

1180-85 zone a is key zone for this week, month and year. It was broken to the downside three times and has recovered three times in the past two months. The price movement could be described as a tug of war.

Because this yellow metal is in latest stage of correction wave, profit-taking from long-term shorts helps to hold the price up.

But low inflation expectations and a strong economic recovery in the US temporarily encourage investors to move away from GOLD. However we still expect GOLD will have a big range movement this year.

After we saw two bear flags on the weekly chart, we predicted that GOLD needed a third push lower to towards at 1075-1032.50 to complete the last sub-wave 5. This year we still try to stick that target. But the last stage is strongly influenced by Fed policy, so we can’t guarantee that GOLD will eventually get there.

Therefore we should adapt a step-by-step trading method. When see the price drop near our price target, we try to go long. When GOLD gets into the resistance zone, we try to go short.

As a guide to the size of future price movements, this is what we expect to see for the average weekly, monthly and annual range:

ExpirationStrike price ES price
01/09/20152095-2100-2105 calls
2085 calls> = 2055
Meanline 2025
1945 puts< = 1990
1925, 1915, 1905 puts

To see the full analysis and the expected price inflection points for this week, download the full analysis here: 150105-gold

Last week 150102-gold-prices

GOLD had a very choppy movement in the past two weeks holiday season. It ran up and dropped, weighed down by the continued dollar gains. But despite the choppy movement, it ends the holiday period virtually unchanged.

Here’s the annotated chart.

Gold futures, 60-minute bars ending Jan. 2, 2015150102-gold-30