RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Gold has been trending lower throughout the month of March after peaking around 1265.0 in the April contract.  Since that time, lower lows and lower highs have been the norm for gold prices and, as the market continues to probe lower, the near-term outlook remains bearish.  The 1213.0 – 1214.0 area marks a significant technical level of structure that should be noted.  This area represents a Fibonacci confluence zone that could serve as resistance to any potential strength in prices.  The 50% retracement of the early 2017 rally comes into play around 1197.5, which is approximately where the market stabilized on Friday morning.  Another area of technical significance should be noted around 1182.7 and this level could serve as an initial downside target for bearish traders.  All eyes are now focused on the FED as Wednesday afternoon will play host to the FOMC meeting announcement.  The bond market appears to be pricing in a March rate hike which, if executed, could give way to a stronger US Dollar.  An argument could be made that a strong US Dollar would add to the bearish bias in the gold market, thus putting the 1183.0 downside target in play. 


A quick glance at the daily gold chart shows, what appears to be, an Elliott wave sequence lower.  The selloff from November ‘16 through the end of the year represents a potential wave 3 and the recent corrective rally that has played out since the beginning of the year represents corrective wave 4.  This wave looks to have terminated within the range of our third wave at the 2/27 high (i.e. retrace less than 100% of wave 3).  If indeed this wave count proves accurate, the recent weakness seen in gold over the past few days could be the start of wave 5 and the expectation would be further declines in gold prices.  


Gold 30 min Chart


Erik Tatje