Gold Is Going To Trade Higher

  • Gold has been drifting sideways since early August
  • Market is well supported at the 50-day moving average
  • The market has a low degree of volatility
  • There will be early weakness in the Spot price, that signals a buying opportunity

Gold Spot has ventured toward the 50-day moving average (50dma) in recent days, as shown by the activity within the golden circle in Figure 1.

Gold 12 month

Figure1: Gold Dec20 (ZGZ0) 12-Month Chart  and Time Technicals                                                                                                                   Source:  , Spotlight Ideas

The time technicals shown in the inset chart of Figure 1 suggest that as the new week begins, Spot may well be under further selling pressure so seeing a risk of Spot breaking below the 50dma.

  • As at close on Friday, September 11, 2020:                                                                                                                                                 Spot 1948.25   50dma 1928.40    200dma 1716.56

Sideways Shuffle

The recent sideway drift of the Spot can be explained as the U.S. Dollar was moving lower. This was a puzzle as Treasury yields traded sideways despite stronger than expected retail inflation wholesale inflation.

Consumer prices rose in August, by 0.4% MoM, following a 0.6% rise in July and was ahead of  market forecasts of 0.3%. Costs for used cars and trucks increased 5.4%, the most since March 1969 and made the largest upward contribution as Americans moved away from public transportation because of fears of contracting COVID-19.

The food index rose 0.1% after falling in July as an increase in the food away from home index more than offset a slight decline in the food at home index. Excluding food and energy, prices went up 0.4%.

One can see from Figure 1 that the recent sideways price pattern has, for now, limited the upside.  This could be a falling triangle as seen in Figure 2. However, before one become too bearish note that as the start of this paper, I said Spot was approaching the 50dma…it has not broken it. Indeed the 23.6% Fibonacci support at 1935.71 offers good protection as shown by the crimson ovals.

I am quite happy to buy gold on any Monday morning wobble lower as the 50dma acts as a second support cushion.  The 50dma has functioned as a robust support and has not been breached since March when it became an inflection point for Spot.

Gold one month

Figure 2: Gold Technical Chart                                                                                                                        Source:  , Spotlight Ideas

I think equities will face a tricky run from now until the U.S. election is settled, so I look for gold to make a new yearly high at 2040. My stop is set at 1900 given I bought at the start of the year.

Macroeconomic Strategist

Stephen Pope is the Managing Partner of Spotlight Group. He has worked in the world of finance since 1982 and has performed d...continued

Comments on this analysis

Your email address will not be published. Required fields are marked *

Latest Related News

Shares surge again as COVID vaccine cheer builds on Biden bounce

Macroeconomic/ geopolitical developments The announcement last Monday from Pfizer that their COVID-19 vaccine had produced extremely positive trial results and is at a late stage of development saw the “risk on” theme reinforced. Value and “old economy” stocks surged higher on anticipation of a broad economic recovery, whilst “new era” tech stocks underperformed.This was on the back of the announcement last weekend that Joe Biden… Continued

Fed Minutes leave markets mixed

Macroeconomic/ geopolitical developments The US stock market “risk on” theme has extended into latter August, with the US benchmark average, the S&P 500 prodding to a new all-time high.Wednesday’s meeting minutes from the FOMC saw another downbeat assessment of the US economic recovery and notes of caution. Plus, the Fed also backed away from a guidance shift at the September meeting.  However, the Federal Market Committee… Continued

Day Trade Ideas: Video analysis – Dollar, WTI Crude, Gold, Emini S&P, Dow Jones

Wide analysis of the US Dollar, Crude Oil, E-Mini Future S&P 500 and the Dow Jones. Also taking a look at Gold and how it is doing in these volatile times. Continued

These S&P Relative Developments Reinforce A Risk-Off Restoration

A great deal is going on in the macro department and this can make it difficult to understand where risk is flowing in broader market as well as the G-10 FX space. A constant back-and-forth between virus related risks and U.S.-China tensions is continuously squeezing equity rallies which has somewhat seeped into G-10 FX risk proxies, stalling rather buoyant rallies. We take a look at… Continued

Gold…A Market Marked by Time & Temperament

Gold sentiment is evenly dividedMarket sentiment is short-term way to a bullish dispositionThe U.S. Fed has painted a poor economic outlook; soft rates near zero till Q4 2022Europe looks to be in a deeper economic dislocation than the U.S., so gold trumps $ and € The are many great debates in the world of financial investing. Active versus passive management, sector rotation, dynamics versus… Continued

Forex Brokers in your location


72% of retail investor accounts lose money when trading CFDs with this provider.


74-89% of retail investor accounts lose money when trading CFDs with this provider.


75% of retail investor accounts lose money when trading CFDs with this provider.


76.4% of retail investor accounts lose money when trading CFDs with this provider.