Gold futures were slightly higher on Monday shortly before the cash market opening but ended up the day lower as the market remains inside its consolidation range, which suggests investor indecision and impending volatility. The lack of movement in the U.S. Dollar and Treasury yields is helping to contribute to the tight trading range. Traders will be looking at this week’s U.S. economic data while listening to several Fed speakers to determine whether there is any chance of a 50-basis point rate cut. Gold will likely rise if investors put this aggressive move back in play. Otherwise, we’re looking at sideways to lower moves for the near term.
Gold closed below the 20-day moving average at 1408 on Monday after running into sellers around 1420. While the market is currently in a short-term downtrend, this might be just a correction as the medium and long-term trends remain bullish. Prices have been in a consolidation pattern for the past three weeks and we are looking for the break for guidance. Buying could accelerate should prices move and close above the key resistance zone around 1420 to 1425. Otherwise, we should look for a move towards the 1385 support area.
Support: 1402 / 1385
Resistance: 1418 / 1425