Gold prices on the Comex are trading higher in early trading this short holiday week. Both gold and silver are seeing a corrective bounce to the upside after a week of strong selling.
Monday’s sell-off did cause near-term technical damage for both metals. A balance between the euro and the U.S. dollar along with higher crude oil may be putting the wind back into gold’s sails.
The December gold contract is trading up more than $19 to above $1,698 a troy ounce. Gold broke below the upper channel trading range set back on September 26 and came as close as $9.60 from crossing below the 150-day moving average.
With Relative Strength (RSI) heading lower and price breaking the T3 Tilson, gold has a lot of technical damage to repair before continuing its trek back to $1,900. One very positive note for gold is it did close above the very important 150-day moving average yesterday.
Fundamentally, gold should benefit from the failure of the “Super Committee” and baring any unseen improvement in the euro zone crisis both gold and silver should remain bullish.
Gold could see continuation lift in price tomorrow when traders prepare for the Thanksgiving holiday that will close U.S. markets, providing the rest of the world an opportunity to jump ahead of the U.S. regarding any major issues out of the euro zone on Thursday.
Traders that entered in gold positions on our recommendation can use the 150-day moving average as support and place stop order positions a few basis points below.
At this point the price of gold is in no man’s land between the 150-day moving average and the backside of the upward channel trend. Traders should consider a wait and see approach at this point for either the price to test the 150-day moving average again or break back into the channel before adding or entering into a new position.
The SPDR Gold Trust (GLD, quote) ETF is a great way to gain exposure to the gold without risk futures contracts. The GLD seeks to replicate the performance of the price of gold bullion. The trust holds physical gold to maintain its holdings.