Technical Sentiment: Neutral

Key Takeaways

• Daily ranges on Gold are contracting after a couple of extremely volatile weeks;
• Unemployment Claims, JOLTS Job Openings and Fed Chair Yellen Speaks are the main events that could drive the U.S. dollar and Gold on Thursday;
• Long term trend remains bearish, but this triangle break could go either way for now.

After a huge 10% tumble over the course of two weeks, followed by a 38.2% swing correction, Gold traders are battling it out in a triangle formation.

Technical Analysis

Although long-term we can only see Gold as extremely bearish, based on lower swing lows and lower swing highs, aggravated by fresh multi-year lows priced during the month of November, price action is free to move in any direction in the short-term. Spot gold is currently around $1,162 ahead of the 13^th/11 U.S trading session, approaching the tip of a triangle formation. This warns us of an impending break-out in the coming hours.

U.S. Dollar gains have severely overextended in recent weeks, making the currency very sensitive to any releases that come up short when compared with the general consensus. A correction above 1.2500 EUR/USD should be mimicked by a bullish breakout in Gold above $1,167, targeting $1,178 / $1,182, with extended potential up to $1,193 / $1,207 within a couple of weeks.

On the other hand, a bearish break below $1,154 should trigger a volatile downtrend continuation. For this scenario, Gold will most likely eye a re-test of $1,131 within a very short period of time as the initial swing. Afterwards, there is a very high likelihood for another break below while price seeks a Lower Low somewhere in the $1,074 region.

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Technical Analysis provided by Capital Trust Markets