U.S. Dollar Continues to Pressure Gold, Here's this Weeks Trading Levels

Gold futures in the December contract rallied sharply this Friday afternoon closing up $27 an ounce to finish at $1,170 after falling over 100 dollars in the last 2 weeks as massive profit taking sent prices to the upside as prices are still trading below their 20 & 100 day moving average settling last week at 1,170 finishing basically unchanged which is amazing in my opinion as Fridays come back was remarkable rallying over $40 from session lows.

Gold prices are trading right near a 5 year low as major support is around 1,100 as the chart structure is awful at this time so I’m advising clients to stay away as the 10 day high is too far away with too much risk as the U.S dollar continues to move higher pressuring many commodities especially the precious metals but wait for the chart structure to improve reducing monetary risk.

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I’m certainly not recommending any type of bullish position in gold as I believe the stock market will continue to grind higher for the rest of 2014 as money flows will continue to pour into equities and out of the precious metals so look for opportunities to sell while placing your stop above the 10 day high make sure that you only risk 2% of your account value on any given trade as volatility is extremely high as I think today’s action was just a kick back in price which was probably overdue.

If you really think about it what’s the reason to own gold at this time as equities continue to trade at all time highs while paying dividends in many sectors were as gold is used as an inflation hedge and at this point in time deflation is a problem not inflation so avoid this market to the upside and take advantage of any rally to get short.

Trend: Lower
Chart Structure: Awful

See you in the markets Monday!
Mike Seery

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