Dollar gains erase fractional increases in gold kitconews gold silver investing metals economics finance mining
Gold is always greatly influenced by dollar strength or weakness. Because gold is paired against the U.S. currency, the dollar is always a major component of price changes. Today extreme dollar strength was the dominant driving force that caused a modest decline in gold pricing.
Starting in the third week of February, the dollar has been trading above its 50-day moving average which is technical confirmation that the dollar is firmly entrenched in a short-term bullish trend. For the last five months, the dollar has remained above the 50-day moving average and confirmed that support is at the 50-day M.A. on two occasions.
Our studies indicate that there is support for the dollar begins at 104.516 the 23.6% Fibonacci retracement and 104.904 the 50-day M.A. There is major support at 101.678 the 38.2% Fibonacci retracement which matches the low between May 30 and June 6. The first level of resistance occurs at 107.26, with major ressistance at the dollar's recent high of 109.105 which occurred on July 14.
Gold briefly broke above $1800 trading to a high of $1805 today. However, these gains were short-lived and gold retreated below $1800 and is currently just $0.20 above the low of $1776. In the case of gold, its 50-day moving average is defining the first level of resistance at $1795.20. The next level of resistance occurs at $1800 with major resistance at $1831.30 the 61.8% Fibonacci retracement.
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