Gold Finds Support At 100 DMA

GLD Traders Late Again as Gold Bullion ‘Finds Support’ at 100-DMA, Catalan Leaders Defy King After ‘Illegal’ Vote

Adrian AshBullion.Directory precious metals analysis 4 October, 2017
By Adrian Ash

Head of Research at Bullion Vault

GOLD BULLION recovered this week’s previous 0.9% loss to 7-week lows in Asian and London trade on Wednesday, touching $1281 per ounce as world stock markets stalled at record highs and bond yields retreated from the last month’s jump.

The US Dollar slipped further from yesterday’s 7-week highs against the Euro while Germany’s Xetra Dax touched a new all-time record high.

Spain’s Ibex 35 index sank another 2% however as Madrid’s bond prices fell – driving borrowing costs to a 7-month high – after Catalonia’s governor Carles Puigdemont said he may ask the regional parliament in Barcelona to declare independence next Monday following the 90% ‘yes’ vote in last weekend’s referendum.

Declared illegal by Spain’s courts and marred by violent police action at polling stations, the ballot achieved a 40% turnout.

“[Catalonia’s leaders] have placed themselves totally outside the law and democracy,” said King Felipe VI in a rare televised announcement, saying that “legitimate state powers [should] ensure constitutional order.”

“In our view gold is likely to remain in demand…on the back of [such] political uncertainties in Europe,” says the latest commodities note from German financial services group Commerzbank.

“Trading [today] leaves gold above the 100-day moving average, which appears to be lending support to the price.”

Gold investment demand retreated Tuesday however, with the giant bullion-backed SPDR Gold Trust (NYSEArca:GLD) shrinking for the second day in succession.

Since the GLD last saw investor selling – back in the first week of September – the gold price had lost $75 per ounce by yesterday afternoon.

Prior to that move, gold gained $45 per ounce from early July’s 4-month lows before the GLD found new net demand from investors.

Chart of SPDR Gold Trust (NYSEArca:GLD) bullion backing. Source: BullionVault via ExchangeTradedGold

Tuesday’s “generally muted session” saw gold prices recover as the Dollar eased back, says Swiss refining and finance group MKS, “[to] end importantly around the 100-day moving average at $1272.50″ per ounce.

“The yellow metal looks to be settling in for a period of consolidation around current levels…due to [this week’s] Chinese holiday period. Short-term key support remains the 100-DMA pivot point.”

“Gold has achieved our target of $1268/1263,” says a technical analysis from French investment and bullion market-making bank Societe Generale, “corresponding to the 100 DMA, the 38.2% [Fibonacci] retracement from December and the 61.8% retracement from July.”

“Daily indicators are now near a floor denoting a corrective recovery can’t be ruled out…[but] $1295/1300 will be a near-term resistance.”

With Spain’s 2018 government budget now likely delayed, “the minority government [of Mariano Rajoy]  has depended on the support of the Basque Nationalist Party for support in [the Madrid] parliament,” reports the Financial Times, “and [the Catalonian crisis] could make it even more difficult for the PNV to lend its support to the government’s legislative initiatives in the future.”

This article was originally published here
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