The absence of significant news on the U.S. monetary policy front has left gold to take direction from the trajectory of the U.S. dollar.
Traders are weighing their safe haven positions and vice versa in front of Europe’s “grand plan.”
With the U.S. dollar’s weakness against the euro (FXE, quote) and other risk-on currencies such as the Aussie dollar (FXA, quote), gold is trying to muster a rally here.
The technical picture has remained effectively unchanged for the past two weeks. Prices remain locked in a choppy range between the 14.6% ($1,589) and 38.2% ($1,680) Fibonacci support levels.
Any break below these immediate support levels exposes gold to the September 26 low at $1,532.45. On the other hand, a break higher through the range top exposes gold prices to a move back up to $1,726.
Traders may want to set price alerts and wait for conformation of a break out of the trading range before initiating or adding to positions.
As always gold prices can swing $30 to $50 per trading session and squeeze traders out of their positions.
Traders can define their risk up front by using the ETF SPDR Gold Trust (GLD, quote) options.
GLD is one of the easiest ways to get exposure to the price performance of gold bullion through physically holding gold bullion as its underlying asset.