Wednesday’s Technical Analysis: Spot Gold
Spot Gold closed higher Tuesday.
The low range close sets the stage for a steady to lower opening when Wednesday’s US session begins trading.
Stochastics and the RSI are Neutral to Bullish indicating that sideways to higher prices are possible near term.
If Spot Gold extends this month’s rally, the 38% Fibo retracement level of the July October fall crossing is the next Northside target.
Closes below the 10-Day MA crossing will confirm that a short term top is in.
Note: Gold’s resilience in here points to more gains, also its suggests that the stock market recovery could be short-lived otherwise the need for the safe haven asset would have surely been lessen.
The rising price of Gold has been matched with increased Bullish speculation.
According to the CFTC, net long positions in the week to 14 October climbed by 12,333 contracts. At 42,196, net Length were at their highest level in 5 wks. ETF inflows have lrisen in response to the plunging equity markets.
Note: support for Spot Gold comes from jewelry demand from India in the lead up to and during the wedding season, which started in late September. India did record a 176% increase in Gold imports in August to US$2-B from about US$756-M.
Overall, the impact of wedding season spot gold buying has faded in recent times as India is no longer the world’s largest Gold consumer, partly because of the on-going government import restrictions on precious metals. If they are further relaxed, perhaps India will regain its Top spot.
Spot Gold drop to 15-month lows is timely for Asian buyers, but even the Gold loving Indian matriarchs may not be enough to supr the precious Yellow metal through the resistance in the Q-4 unless the Buck retraces some of it Q-3 surge, and the Gold Bears exhaust themselves (run out of cash).
Have a terific week.
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