Gold Price Nears Breakout As Trendlines Continue To Merge
CHINESE GROWTH HITS A 26-YEAR LOW IN Q3, GOLD STABLE FOR NOW
Gold is getting a mild lift from recently released Chinese data that showed below expectation third-quarter GDP of 6%, its lowest quarterly growth rate since 1993. The ongoing US-China trade war continues to weigh on the world’s second-largest economy, hitting risk sentiment, despite the positive words from both sides after their recent trade talks.
The US dollar remains at, or very close to, its lowest level since mid-August, adding substance to gold’s bid, although the greenback is trading in heavily oversold territory and is currently supported by the 200-day moving average.
US DOLLAR PRICE DAILY CHART (DECEMBER 2018 – OCTOBER 18, 2019)
(Click on image to enlarge)
Gold has moved in a narrow trading range over the last week and is being kept in check by a symmetrical triangle formation. The support and resistance trendlines are nearing an apex, signaling a breakout in the short-term. The formation would normally suggest a break higher, but the set-up is being clouded by the 20-day moving average which has acted as resistance this week. To rally, gold will need to break and close above the 20-dma and the current resistance trendline and 50-dma at $1,507/oz. Above here, two recent highs at $1,517/oz. and $1,519.5/oz need to be cleared to leave the way open for a re-test of the September 24 high at $1,535.8/oz.
GOLD PRICE DAILY CHART (FEBRUARY – OCTOBER 18, 2019)
(Click on image to enlarge)
IG Client Sentiment data show that 69.0% of retail traders are net-long of gold, a bearish contrarian indicator. However, daily and weekly sentiment shifts give us a mixed outlook for gold.
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