Gold – $1180 support comes back into play

Compared to previous weeks, volatility in the Gold markets was quieter than what we have noticed recently. Gold largely traded between $1177 and $1205, with the latter being seen as resistance. The precious metal withstood pressure on Wednesday evening when the latest FOMC Minutes largely hinted that the first US interest rate rise would occur between the middle and latter 2015 – increasing demand for the USD. However, the widely spoken about $1180 psychological support level came to the rescue once again, with Gold touching $1177 before concluding the week as high as $1207.

Although Gold has spent the majority of the latter half of 2014 trading strictly in accordance with US economic news, it might be worth investors keeping an eye out on economic news elsewhere. For example, the early Monday morning news has already suggested that global business confidence is at a five-year low and with the PBoC (People’s Bank of China), ECB (European Central Bank) and BoJ (Bank of Japan) all easing to stimulate its economies, further global economic concerns could push investor attraction towards Gold. In regards to US economic data, attention should be paid towards US GDP and Consumer Confidence (Tuesday), Durable Goods (Wednesday) Initial Jobless Claims (Thursday). Further signals of the US economic outlook continuing to improve this week would likely pressure metals.

In reference to the technicals, Gold has currently found resistance around the $1205 area and would need to surpass this level if it were to make a move towards future resistance around $1215 and $1223. Support can be found at $1190, with critical support being located around the $1180 support level. If the value of Gold was to decline back to the $1150 area, a solid break below $1180 would be required.

Written by Jameel Ahmad, Chief Market Analyst at FXTM.

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