Friday June 23, 2017 18:00
For the first time in three weeks, gold prices have stabilized. Although gold closed slightly higher, in essence flat for the week, this occurrence marks the first time in the last three weeks that gold prices have not closed lower on the week. Gold had been losing value ever since traders were unable to move the price above $1,300 per ounce.
Gold futures (August 2017 contract) gained approximately $7.50 today. As of 330 EDT, gold is trading at $1,256.90, a gain of +0.60%. This marks the third consecutive trading day in which gold prices have closed higher. But most noteworthy was the intra-week low, which took gold pricing roughly to $1,242.
The 200-day Moving Average & Gold
Market technicians and analysts utilize the 200-day moving average to ascertain whether or not the long-term direction of a stock or commodity is bullish or bearish. On Tuesday and Wednesday of this week, gold traded to a low of roughly $1,242. This price point was just at the current 200-day moving average for gold pricing.
As we spoke about earlier this week, in the case of gold, the 200-day moving average was a critical price point that prices needed to hold in order to validate the bullish price model currently in play. This bullish model is a long-term model which begins at the end of 2015 when prices bottomed after a multiyear decline at $1,040. Since that time, gold prices have traded to a series of higher highs and a series of higher lows.
A Series of Higher Lows
In 2016, gold traded to a higher high and a higher low than the previous year, which was the first occurrence since gold’s multiyear decline. Currently, gold prices this year have already accomplished a higher low than last year.
2017 began with gold recovering from last year’s dramatic correction, which accelerated immediately after the presidential election. Trading to a low of $1120 at the end of 2016, prices recovered through the first months of the year.
During 2017, gold has traded to higher highs and higher lows on four occasions. The first low occurred at the end of January when gold prices retraced to roughly $1180. The next low occurred on 10 May when gold prices traded to a low of $1194. On May 11, gold prices once again traded to a low of $1214.
Which brings us to this week’s activity in which falling gold prices once again found support at $1242 after falling from approximately $1300. If this low holds, this will be the fifth occurrence of a higher low on the year.
What is still needed is for gold to trade to a higher high than the previous high of last year, which up until this point has not occurred.