Gold extends tight trading range near multi year lows

Gold (daily chart shown below) has continued to trade in a tight trading range after pulling back sharply from its 1392 high of mid-March.

This trading range has fluctuated around halfway between the 1180-area multi-year low at the end of 2013 and the noted March 1392 high.

Gold’s rise for the first three-and-a-half months of the year had shown promising signs of a bona fide recovery after the long drop from 1800 in October 2012 and then the large double-bottoming pattern around 1180.

The recovery began to fizzle, however, when gold pulled back sharply in March and subsequently entered the current trading range.

When the March high of 1392 was reached, the 50-day moving average had made a conspicuous cross above the 200-day moving average, a bullish indication that had not been seen since late 2012. This bullish indicator also fell short, however, when price action began its prolonged consolidation in April.

Currently, the major resistance area to watch remains at the 1320-1330 price zone. A breakout above that area could put gold back on the recovery track, with a major upside target around the 1425 resistance level.

Alternatively, any breakdown below the key 1265 support level could return the precious metal back down towards a retest of multi-year depths once again.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.