GO
Loading...

Ilczyszyn: Key Levels to Watch on Gold

King dollar for a day.

Comstock Images | Getty Images

If you can get the dollar right, you'll get a lot of things right, including gold. Remember that all commodities are priced in dollars: Dollar up, commodities down.

The price of the precious metal fell early Friday, leading some to think it could produce a second consecutive weekly loss. After the price of gold recovered from Monday's low at $1,729, gold traders put emphasis on the currencies heading into the European Union summit. As it looks now, another summit will come and go with little more than hot air being produced.

(Watch: Currency Trade Amid EU Summit)

So what are the key levels to watch?

Rallies were weak once gold was trading above $1,750, finding little to no bidding for a follow-through against major resistance at $1,757. The market is currently trading at $1,735 with a low of $1,732.4. There is a major support pocket at $1,729 - $1,731 that not only correlates with this week's low, but with several retracement levels. A close below here will be very bearish, with only the 50-day moving average that sits at $1,720 and light support at $1,717 being the last levels left before a likely test of $1,700. Stronger U.S. economic data has indeed put pressure on gold.

Please do not get me wrong – I am looking and giving this market an opportunity to hold this week's lows, but without any mojo in this market, traders must know their risk below $1,729 and adjust accordingly. At this point, traders should simply not be married to any position. A hold and a close back above $1,738 will be encouraging to the bull camp.

So what's my trade?

I'm buying a correction at $1,721 with a sell stop $1,715. This trade will expire Friday if not filled.

What Rich is Watching

Symbol
Name
Price
 
Change
%Change
Volume
USD INDEX
---
GOLD
---
GOLD/USD
---



Read on for 10 Things You Need to Know to Trade Futures


Watch "Futures Now" Tuesdays & Thursdays 1p ET exclusively on FuturesNow.CNBC.com!

Like us on Facebook!
Facebook.com/CNBCFutures

Follow us on Twitter! @CNBCFutures

Questions? Comments? FuturesNow@CNBC.com

Contact Blog

  • 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.