Gold – Shaken Not Stirred

Gold rallies through 1221 but runs into a brick wall at the 100-day moving average. 

Well, Gold played out as per the hourly charts mentioned earlier this week. As general USD weakness, more Trumper-tantrums and flare-ups in the Ukraine saw a safe-haven stampede to the yellow metal.

Gold rallied from 1208 up to 1226, accelerating on the break of previous resistance around 1221. However, as the daily chart below shows, it failed exactly at the 100-day moving average around  1226. It then proceeded to most of those gains back in New York and has traded as low as 1211 in Asia before stabilising somewhat.

So what happened. My guess is as follows. Buying initially took Gold to the aforementioned resistance level on safe-haven buying around 1221. Once that broke, buy stop-losses and entries were triggered, and that spurred the 2nd round of buying. When this ran out of momentum at the moving average, the new longs got nervous, and when the 1221 area broke, they bailed and sold out of their positions, pushing gold lower.

I tend to call these moves fear of missing out trading. (fomo) Think of it like a herd of animals running off the side of a cliff, climbing back up the cliff and then running off it again en masse. We will have to wait for tonight’s Non-Farm Payrolls to either give some support to a weary dollar or set the tone for a deeper correction.

Looking at the chart below after the last 24 hours price action one thing is for sure. The 100-day moving average, today at 1225.15, is a key resistance level. Behind this is a set of daily highs from December in the 1233/34 region. Support comes in at 1200 and then long term support at 1280.

GoldDaily

Gold Daily

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst - Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia and the New York Times. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley