GOLD formed an narrow week range last week, barely more than a $24 range. It mainly waited for the Fed policy decision coming on Wednesday. It has been holding under $1088.30, the prior week’s high, and above the $1045.40 low.
Last week’s trades
There wasn’t much profit to be had for traders last week, The total weekly range was less than $24, and the price did not reach any of Nat’s major inflection points. It stalled below the 1st resistance area below $1100, and the decline stopped above the first support around $1060.
Some alert traders made a little profit when the price moved back above Nat’s key line on Tuesday, and reversed when it reached the Monday high around $1085, but if you were not monitoring her room you likely missed those trades.
The two-way move was worth about $2,000 per contract, which is certainly worth taking, but not many traders got it.
Its worth noting the bounce Friday afternoon, the second week buyers have stepped in late to move the price above the support and out of a congestion area.
This week the Fed has to make an interest rate decision in the two-day FOMC meeting. Whatever decision is made – raise or no raise — could rock the GOLD price this week.
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A move above $1093.75 level could trigger some short covering and push the price back above $1100. A move below $1060 could lead the price to retest the $1045-43 low. In any case we will continue to see the buyers below the $1060 level to slow down the decline, perhaps due to end-of-year profit taking.
Based on the daily chart, the short-term still has some room for a bounce due to the oversold condition. The long-term and intermediate-term also remain in an oversold condition. After six years declining, GOLD is not too far away from its long-term bottom. Given that the equity market is often regarded as overvalued, some smart money could rotate into the oversold gold market.
LONG-TERM SUPPORT at $1007.70-1033.90 – Yearly breakout level from Year 2008- 2009
LONG TERM TRENDline SUPPORT at $1009.50 this week.
INTERMEDIATE TERM SUPPORT at $1045-1035 zone