Monday's Market Minute: Is Gold Gearing Up For A Move?

Gold futures haven’t seen much action recently, but Thursday brought a +1.17% rally with price making new relative highs while the RSI did the same. This typically would be a good sign for bulls, but price stopped short at the 50-day Simple Moving Average near 1830 and then gave back much of the move on Friday. Further examining moving averages, Gold’s price action during July mostly took place in the relatively narrow range between the 50-day SMA to the upside and the 252-Day Exponential Moving Average to the downside, roughly 1795 to 1830.

Additionally, many other major moving averages are clumped together and trending sideways, suggesting weak trend strength and limited directional bias.

This paints a scene of contracting volatility, further evidenced by the shrinking distance between the Bollinger Bands study’s two channels. Traders should pay particular attention to scenarios like this as low volatility can often be the precursor to high volatility, so watch for any significant breakout beyond the 50-SMA or the 252-EMA.

Image by Florian Pircher from Pixabay