Gold Price Update Special 1-17-2015
Bullion.Directory precious metals analysis 17 January, 2015
By Terry Kinder
President, Senior Technical Analyst, Terry Kinder’s Gold and Silver Prices
The gold price both in euros and dollars had a very good week this week. Gold priced in dollars finished the week at $1,276.90 (Comex continuous), while it finished in euros at €1,107.20. Still, this coming week will present some potentially important price resistance levels that will likely determine whether the gold price continues to advance or reverse.
Gold Price Update 1-17-2015: After a nice advance this past week, the gold price has become overbought and may face stiffer price resistance. Image: pixabay
In the past we have looked at the gold price within the context of a Schiff Pitchfork. The Schiff Pitchfork is used in cases where the steepness of the more traditional Andrews’ Pitchfork doesn’t align as well with price movements.
However, it’s worth considering what both pitchforks say about the gold price, so we have placed both of them on the chart above. The Schiff Pitchfork is shaded more darkly while the Andrews’ Pitchfork is not as shaded.
Starting with the Andrews’ Pitchfork you can see that price has made several attempts to exit out of the upper parallel line of the pitchfork with little success, until recently. However, despite the very strong movement of the gold price higher, the price has not crossed over the black price trigger line which intersects near the $1,320.00 level on the right hand side of the chart.
Taking a look at the Schiff Pitchfork, you may notice that the price has been contained within it for around a year. So, basically, the gold price has been trading within a gently declining price range for most of the past year. In order for the gold price to exit higher out of the Schiff Pitchfork, it needs to move above the $1,350.00 to $1,360.00 level, depending on when it attempts to exit.
Taking information from both pitchforks, as well as looking at Fibonacci Retracement levels, we can determine a number of important support and resistance levels for gold:
Gold Price Update Special 1-17-2015: In climbing to near $1,277.00 this week, the gold price has become overbought.
1) Support at $1,125.00 – $1,130.00 based on the Fib Retracement level of 0.618 and the lower parallel line of the Schiff Pitchfork;
2) Resistance at $1,295.40 based on the 0.236 Fib Retracment level;
3) Resistance at $1,325.00 – $1,333.00 based on the price trigger line;
4) Resistance at $1,392.60 based on the 0 Fib Retracement level.
These resistance levels should also be considered within the context that the gold price has become overbought. The daily RSI has reached 72.4305. While gold can remain overbought, at some point the price should be expected to decline given the current RSI. Given that gold is overbought, gold may start to lose upward price momentum as it approaches $1,295.40 or above.
Despite having a very good week, the gold price will likely face stiffer price resistance should it cross above $1,295.40 or so. For a longer term gold price outlook click here.
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