08:56, 20 March

Consolidates above Key $1300 Level on Global Concerns

In the last couple of weeks gold has been able to stop the strong falls and rally back above the key $1300 level where it is currently receiving some support from. Only a few weeks ago gold was cruising along pushing to new nine month highs on the back of solid support from the key $1300 level, before crashing lower pushing through any support at the $1300 level and moving to its lowest levels in six weeks. The $1300 level offered some resistance however it was fleeting as gold moved back above. 
In late January gold enjoyed a solid push higher, breaking through resistance at $1300 and establishing a new trading range above this level. The significance of $1300 is for several weeks, gold met stiff resistance at this level, after enjoying a healthy surge higher throughout December.

The move higher in December saw gold move to a then six month high just shy of $1300 after enjoying some solid support from the key $1240 level and the $1200 level before that. The $1240 level may play a role again should gold continue to decline as it is the next obvious support level. For a couple of weeks before the push higher gold consolidated a little resting on support at $1240 after making a strong rally back towards this level, which had become significant when it offered reasonable resistance halting its climb a few months ago.

After struggling with the resistance level at the $1240 level for several weeks, it fell back to another key level of $1200 where it bounced off strongly. The $1240 level provided some support in July and more recently pushed gold lower in October, so it is significant that it has now broken higher. The market will now be watching the $1300 level as this level was significant earlier last year. For the most part through October and November last year gold had made a home in between two key levels of $1200 and $1240.

Ongoing concerns over the global economy are keeping gold well supported presently. Data released last week in the United States, underscored growing pressure on the U.S. economy, as the number of Americans filing applications for unemployment benefits increased more than expected last week while new home sales fell more than expected in January. Then the ongoing United States - China trade dispute and its potential impact on global growth has been pushed back further, as more work is needed in U.S. - China negotiations, U.S. Treasury Secretary Steven Mnuchin said last week. Therefore, the summit to seal a trade deal between U.S. President Donald Trump and Chinese President Xi Jinping will not happen at the end of March as previously discussed. Brexit is also playing a role as the 27 members of the European Union are considering whether to grant the U.K. an extension to its European exit. This Thursday the European heads of state are due to meet in Brussels to discuss a potential delay to Article 50, which is the legal framework by which an EU country can exit the union. It is up to the 27 heads of state to decide, unanimously, whether such delay can be granted. Meanwhile, comments from China’s Premier about a slowing economy suggest that one of the world’s biggest economy is struggling, which is offering gold a bit of support.