August Gold Futures In Noncommittal Technical Area
August gold futures have retreated into a noncommittal territory to open the third trading week of June. At press time (about 2:00 PM EST), prices are hovering just above the $1725.0 handle. Gold traders and investors appear content to stand pat for the time being.
2020 has been a big year for bullion. Prices have already posted a near $350 range amid the coronavirus pandemic. Now, there are a few observations worthy of note for August gold futures:
- Prices remain above the 38% Retracement of 2020’s range ($1661.3), confirming the uptrend.
- Uncertainty continues to dominate the markets. A “second wave” of COVID-19 infections and November’s U.S. General Elections are primary drivers of market ambiguity. Traditionally, uncertainty is good for gold values.
- It’s important to remember that inflation has yet to hit the global monetary system in a meaningful way. During inflationary cycles, gold has a tendency to rise; if and when the USD becomes devalued, bullion will be positioned to extend gains.
Given these three items, a bullish bias toward August gold is warranted. Let’s dig into the daily technicals and see where price currently stands.
August Gold Futures Enter Rotation
For all intents and purposes, bullion has been in a relative holding pattern since mid-April. Now, things are tightening further with a return to the 1725.0 handle.
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Here are two levels to watch for the near future:
- Resistance(1): 2020 High, 1789.0
- Support(1): 38% 2020’s Range, 1661.3
Bottom Line: As long as 2020’s top remains this year’s high-water-mark, I’ll have buy orders in the queue from $1665.9 in August gold. With an initial stop at $1658.4, this trade produces 75 ticks on a 1:1 risk vs reward ratio.
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