Over the course of one hour gold gained $35 starting at the New York open ($1678.0 and an hour later it was at $1716.90. For the six hours after gold’s dynamic break to the upside gold consolidated at a very narrow trading range at $1720.40 and a low of $1712 with little volatility after the dynamic swing. As of 4:43 PM EST, December futures are currently set at $1715.80 after factoring in today’s gain of $35.30 or 2.10%. While the dollar played a small role in today’s sustained rally, it only accounted for about 25% of the dynamic movement seen in gold. The dollar index traded at a lower low, lower high and lower close than yesterday’s trading range. The dollar index is currently down 0.44% at 109.505. Spot gold is currently steady at $1712.70 and had a bigger price gain than December futures today gaining $37.20. According to KGX (Kitco Gold Index) traders who bid higher for the precious yellow metal reached $28.15 with the remaining $9.05 gain directly attributable to the dollar’s weakness.
On a short-term basis, using a one-hour timeframe, we have added a Fibonacci retracement set starting at the highs set at $1821 and ending at the triple bottom located around $1621. The next resistance level is at the 50% retracement from the data set described above at $1621.70. Above that is the 38.2% Fibonacci retracement at $1745.30. Short-term support starts at the 61.8% Fibonacci retracement seen at $1698.10. Important support is taking place at the 78% Fibonacci retracement at $1665.60. Today’s breach above $1700 per ounce was a combination of minor dollar weakness and according to many market technical analysts oversold gold. The real test will come on Thursday 10 November when the government releases the latest inflation versus CPI figures for October.
The Cleveland Fed’s “Inflation Nowcasting” still expects the CPI to reveal that inflation in October is still forecast to reach 8.09%. However, there was a small drop in November estimates, which moved from 8.09% yesterday to 7.99% today. While it’s a fractional drop, it may give the Federal Reserve the confidence it needs to see recent rate hikes begin to take hold. However, one possible explanation for today’s rapid gains is likely to be due to the midterm elections taking place in the United States. Today’s election could have a profound effect on future House and Senate fiscal actions that could pressure Federal Reserve policy. For those who want more information just use this link. I wish you as always good trading,
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