Top Trader: Levels to Watch on Gold
iiTrader Founder & Chief Market Strategist
The overnight market took a pause after Wednesday's stock market selloff. Then, the Bank of England halted expansion of its bond-buying program Thursday, which leaves gold trading in the green this morning.
As I look at the gold chart, I will be watching the $1,712 to $1,709 support area. Gold is holding the two day recovery it enjoyed leading up to the election, as it relies on its safe haven attributes. However, with the dollar and Treasurys seeing continued support, downward pressure on commodities will make this an uphill battle for gold traders.
Part of this support could be coming from Greece. The country passed its budgetary vote in order to continue receiving its lifeline, which is not a surprise, but there was fear around the small chance that it wouldn't pass. With that problem seemingly resolved for now, investors might not seek the safety of gold. The $1,725 area continued to be resistance this morning, just as it was late in the day yesterday. However, if it does close above that level, momentum will be established and all bets are off.
So what's my trade?
The $1,709 to $1,720 levels is basically no man's land, and you can play either side of it. Above $1,725, I'm looking to buy. A close below $1,702 will be negative, and I'll look to sell.
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