Trading The Consolidation Pattern In Gold

Since the spike in value of early last week, gold has entered consolidation. Prices of April gold futures are about $80 off all-time highs and trading in a tight range near the $1600.0 handle. The volatility of the past month has largely resided as investors are pricing-in COVID-19 and its future implications.

Although the COVID-19 outbreak has certainly spiked a run to gold, mine closures in South Africa have been a key part of this month’s action. A moratorium has been announced for most mines, effective until 16 April. While this may be a minor event in bullion’s long-term valuation curve, it will certainly contribute to any supply-side concerns that the markets may have.

April Gold Futures Hold Firm In Bullish Territory

If you’re an Elliot Wave fan, then the daily chart for April gold futures is right up your alley. March has featured an all-time high and yearly low ― is the action going to continue?

At this point, it appears that institutional traders and investors are neutral toward gold at $1625. Daily ranges have tightened considerably over the past five sessions, but a bullish bias is still warranted. Here are the key support levels to watch as the week progresses:

• Support(1): 38% Retracement, 1606.9
• Support(2): Daily SMA, 1604.9
• Support(3): Bollinger MP, 1595.4

Overview: As we kick off the trading week, the 1605.0-1575.0 area is critical support for April gold futures. If we see price take out this zone, a plunge to 1500.0 may rapidly develop. For now, it looks like traders and investors are getting used to the impacts of COVID-19, but are still holding some bullion as insurance against the unknown.

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

Related Articles

Gold Price Weekly Forecast: Will XAU/USD Break $3,370 as US Jobs, GDP Loom?

2 hours ago

Save

AUD/USD Rises on Tariff Talks—Triangle Squeeze Looms

24 hours ago

Save

Forex Signals April 25: Will Trade Talks & Earnings Offer a Bullish Finish for DJIA?

1 day ago

Save

Comments

0 0 votes

Article Rating

Subscribe

Login

Notify of

new follow-up commentsnew replies to my comments

Please login to comment

0 Comments

Oldest

Newest Most Voted

Inline Feedbacks

View all comments