Gold News Update - 3 October 2018

PRECIOUS METALS RANGES- Trade date: October 2nd

COMMENTS:
While XAU/USD presently remains trapped within the broader sideways trading range between the Aug 24th low at USD 1183.20 and the Aug 28th high at USD 1214.85, from the point of view of bullish interests, the market displayed its mettle on Friday by staring down a significant break of support at the bottom end of the range which would have opened the way to lower levels. We had noted on Friday that it was “…pretty much a ‘make or break’ moment for XAU/USD at this level. The market either holds and rebounds, or it doesn’t.” and that “respecting the support level at USD 1183.50 seems prudent but a tight protective stop loss is imperative.” Yesterday’s price action pushed gold up to the 55 Day moving average (without closing above there) and the market now needs a close above USD 1203.55 and more importantly, a move and close beyond the downtrend / resistance line (USD 1213.75) - which has remained undefeated since gold began its retreat in mid-April -, which will signal that in all likelihood, that XAU/USD is off to the races from a bullish perspective.
 

COMMENTS:
A monster ‘bullish engulfing’ candlestick yesterday has all but validated sticking with the favoured view in recent commentaries that “XAU/AUD will make further attempts at trendline resistance (1685.05) and the technically significant 200 Day moving average (1691.05). Whilst dip buying into current weakness is the preferred trading stance, it is imperative that a tight protective stop loss is in place just beneath the August 28th low, given that there is little by way of technical support until the August 16th low (AUD 1605.10) if the support is broken”, and in spite of last week’s slightly shaky price beneath the AUD 1658.00 level, XAU/AUD held the critical major level of support at the AUD 1635.85 / 1636.85 region (August 28th low and 61.8% Fib of 1605.10 > 1688.20). XAU/AUD’s immediate task now is to knock out the downtrend line resistance (1682.60), which given the strength of yesterday’s bullish engulfing candlestick, seems imminent. Beyond this lie resistances at AUD 1686.90, 1688.20, 1691.20 and 1706.25 initially.
 

COMMENTS:
Last Friday showed that bullish speculative interests were indeed able to “…regroup and attempt to knock out the trendline resistance (USD 14.67)”, and although a significant close above the trendline didn’t eventuate until yesterday (ending the downtrend that commenced in mid-June), the genesis of the present move was contained within Friday’s ‘bullish engulfing’ candlestick. XAG/USD now sits in an interesting place as it eyes some meaty upside technical targets at USD 15.19/15.23, 15.47, 15.63 & 16.03. Dip-buying is the preferred trading stance for the present moment.
 

COMMENTS:
XAG/AUD has surged since the wick was lit under the market last Friday, when a ‘bullish engulfing’ candlestick was posted on the Daily chart after the sensitive 5 & 21 Day moving averages had crossed. As noted previously, “If however, XAG/AUD can gather some momentum and take out and close above Tuesday’s high above AUD 20.0575” (from its price at the time of $19.81), then “some mouthwatering (from a risk/reward ratio perspective) topside technical targets…” at AUD $20.30, $20.35, $20.88 and $21.30 “would come well and truly into play”. Of those targets, only $20.88 and $21.30 remain untested now and the price action since last Friday certainly provides a good degree of confidence that XAG/AUD will have the legs to continue advancing towards those levels. Dip buying remains the preferred trading stance currently.

Kind regards,
Andre