How to Trade Gold This Week: Pro

Gunay Mutlu | E+ | Getty Images

Gold bugs are doing their best to defend $1,200.

Gold retested $1,200 on Friday, trading down nearly $50 from the highs following a much-better-than-expected employment report. We are not seeing the weakness follow through in this session, as the market has stabilized and is retesting the $1,233 retracement level, which will now serve as resistance. A close above $1,233 on Monday will signal a likely consolidation back toward $1254.60 to $1,255.70 this week.

Friday's jobs report led the U.S. dollar to soar to new swing highs, putting pressure on commodities priced in dollars, which we saw clearly in the metals. On Monday morning, the dollar was slightly in the red, which was giving the metals a breather.

(Read More: Gold's Jobs Nightmare)

It is not too surprising to see gold trade well off of Friday's lows, given what we saw in late Friday action. After bleeding through the light $1,208 to $1,210 support, the market did not close on the lows, as shorts took profit ahead of the weekend, and some investors found value at the $1,200 level.

Gold could have an easier time this week. After all, earnings season is beginning, and buying gold at the $1,200 level can still be seen as a way to hedge risk.

(Read More: Three Reasons Commodities Look Horrible: Roubini Strategist)

We look to see a consolidation higher, and support will sit at $1,221. Only a close below that will signal lower price action to come.

Rich Ilczyszyn is founder and CEO of iiTrader. Follow him on Twitter @iiTrader.

Watch "Futures Now" Tuesdays and Thursdays at 1 p.m. EDT exclusively on FuturesNow.CNBC.com!

Like us on Facebook! Facebook.com/CNBCFuturesNow.

Follow us on Twitter! @CNBCFuturesNow.

Contact Futures Now

  • Showtimes

    Watch Futures Now Tuesdays & Thursdays 1p ET exclusively on cnbc.com!

Sponsor Links

  • CME Group brings buyers and sellers together through its CME Globex electronic trading platform and trading facilities in New York and Chicago.

  • Take your trading to the next level with a platform that lets you trade stocks, options, futures and forex all in one place with no platform or data with no trade minimums. Open an account with TD Ameritrade and get up to $600 cash.