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David Becker

Gold prices whipsawed and formed a doji day with a long tail as prices initially moved lower but rebounded following a softer than anticipated US ISM manufacturing report. The data helped put pressure on the US yields which weighed on the US dollar paving the way for gold to remain buoyed. Traders will now focus on the US employment report which is scheduled to be released on Friday.

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Technical Analysis

Gold prices remained rangebound on Monday after finishing November with a 3% loss. Support is seen near and upward sloping trend line that comes in near 1,454 and then the November lows at 1,443. A breakdown below this level would lead to a test of the August lows at 1,400. Resistance is seen near the 20-day moving at 1,465. Additional resistance is seen near the 100-day moving average at 1,485. The 20-day moving average has recently crossed below the 100-day moving average reflecting that a short-term down trend is now in place. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current trajectory points to higher prices. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).



ISM Manufacturing Comes in Weaker than Expected

According to the Institute of Supply Management, the index showed a decline to 48.1 versus an expectation of 49.4 and the previous month’s reading of 48.3. November was the fourth straight month below the expansion level. The subcomponents were also weaker than expected. New orders slumped to 47.2, down 1.9% from October’s 49.1. Inventories came in at 45.5, down 3.4 points from the previous month. Employment was at 46.6, down 1.1 point for the month, while export orders fell 2.5 points to 47.9. Supplier deliveries was one of the few metrics in expansion, rising 2.5 points to 52.

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