Gold – Moving Average Bands Offer Direction Clues

Gold has been back in the spotlight as of late, with the prospect of a Fed rate hike this year capping gains in the precious metal and threatening to push it back below the $1,300 level for the first time since June.Gold Daily

A month ago Gold was trading at just below $1,370 before falling more than 4.5% where it ran into support around $1,300, where the 89-day simple moving average intersects a prior level of support and resistance.

It then found some reprieve on Friday when the US jobs report cast further doubt on whether the central bank will raise interest rates at its next meeting this month.

FedWatch

Source – CME Group FedWatch Tool

It now finds itself trading within a moving average band, with the 89-day SMA offering support below and the 55-day SMA resistance above. The latter was also a key level of support for three weeks in August.

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A failure to break back above the 55-DMA could see the 89-DMA once again coming under significant pressure, with a break of this level being quite a bearish signal. While Gold may find some support below here around $1,290 having done so on occasions before, the next major support level could be found around $1,250-1,260, a prior area of support and resistance.

A move above the 55-DMA could be quite a bullish signal with $1,350-1,355 being the next key level of resistance.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.