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David Becker

Gold prices moved lower on Thursday, but settled well of the lows of the day rebounding near support levels. The dollar eased, as US yields moved lower, which provided the respite gold prices needed from their recent slide. Geopolitical concerns have eased, following the rockets Iran sent into Iraq earlier in the week. It appears that a Ukrainian Boeing 737 was shot down during the Iranian raid of an Iraqi military base, killing many foreign persons. Canada is now demanding that Iran let international investigators into Iran to allow them to analyze the cause of the downed plane. This could keep a geopolitical bid under gold prices. Trader’s await Friday’s jobs report from the US Department of Labor. Expectations are for 160k jobs. This follows Wednesday’s larger than expected increase in private payrolls reported by ADP.

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Technical Analysis

Gold prices continued to ease lower following Wednesday outside day. The outside day reversal pattern generally points to lower prices. Volatility will likely remain. Target resistance is now seen near the January highs at 1,611.  Short term support is seen near the 10-day moving average at 1,537, prices bounded at this level of Thursday. The 10-day moving average recently crossed above the 50-day moving average which shows that a short term uptrend is now in place. The daily RSI (relative strength index) is moving lower and fading declining from 76,  to 70 which reflects decelerating positive momentum.

The RSI is above the overbought trigger level of 70, and also points to a potential future correction. Very short term momentum is negative as the fast stochastic generated a crossover sell signal in overbought territory. The current reading of 67, is down from 76 below the overbought trigger level of 80 which reflects decelerating positive momentum.

 

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