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Home ANALYSIS

Gold moves more comfortably above $1900

A.R Chowdhury by A.R Chowdhury
March 1, 2022
Reading Time: 4 mins read
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Gold moves more comfortably above $1900

Gold

Gold runs away from 100 hour MA

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The price of  gold 
Gold

Gold is the most widely traded and important commodity. Prized for its historical importance and used for trading an exchange of goods, the gold market today is estimated at nearly $2.4 trillion.The value of gold fluctuates constantly, as it trades on public exchanges where it has a price that is determined by supply and demand. Gold has historically had tremendous significance and even today is extremely sought after. Gold has been used as a currency as it doesn’t corrode, and the material allows for some absorption of light creating a yellow glow, which lends the name yellow metal.Ultimately, institutional and retail investors buy and sell gold contracts or physical gold, thus creating the demand and supply flow.This can be pure speculation, to acquire or distribute physical gold, or as a hedge for commercial application. For day-traders, the purpose of trading gold is to profit from its daily price movements.How to Trade GoldDay-trading gold is speculating on its short-term price movements. Of note, physical gold is not actually handled or taken possession of, rather the transactions take place electronically and only profits or losses are reflected in the trading account.There are a number of ways to ultimately trade gold. Retail brokers typically offer exposure to gold through contracts-for-difference (CFDs).Beyond retail brokers, the main way to trade gold is via a futures contract. This represents an agreement to buy or sell something, i.e. gold at a future date. Buying a gold futures contract doesn’t mean you actually have to take possession of the physical commodity.Day traders close out all contracts (trades) each day and make a profit based on the difference between the price they bought the contract and the price they sold it at. However, on a futures exchange, gold moves in $0.10 increments only. This increment is known as a tick. It is the smallest movement a futures contract can make. If you buy or sell a futures contract, how many ticks the price moves away from your entry price determines your profit or loss.

Gold is the most widely traded and important commodity. Prized for its historical importance and used for trading an exchange of goods, the gold market today is estimated at nearly $2.4 trillion.The value of gold fluctuates constantly, as it trades on public exchanges where it has a price that is determined by supply and demand. Gold has historically had tremendous significance and even today is extremely sought after. Gold has been used as a currency as it doesn’t corrode, and the material allows for some absorption of light creating a yellow glow, which lends the name yellow metal.Ultimately, institutional and retail investors buy and sell gold contracts or physical gold, thus creating the demand and supply flow.This can be pure speculation, to acquire or distribute physical gold, or as a hedge for commercial application. For day-traders, the purpose of trading gold is to profit from its daily price movements.How to Trade GoldDay-trading gold is speculating on its short-term price movements. Of note, physical gold is not actually handled or taken possession of, rather the transactions take place electronically and only profits or losses are reflected in the trading account.There are a number of ways to ultimately trade gold. Retail brokers typically offer exposure to gold through contracts-for-difference (CFDs).Beyond retail brokers, the main way to trade gold is via a futures contract. This represents an agreement to buy or sell something, i.e. gold at a future date. Buying a gold futures contract doesn’t mean you actually have to take possession of the physical commodity.Day traders close out all contracts (trades) each day and make a profit based on the difference between the price they bought the contract and the price they sold it at. However, on a futures exchange, gold moves in $0.10 increments only. This increment is known as a tick. It is the smallest movement a futures contract can make. If you buy or sell a futures contract, how many ticks the price moves away from your entry price determines your profit or loss.
Read this Term
is trading to a new session high of $1935.21. The price trades just off that level at $1934.71.

The price is currently up $25.87 or 1.35%.

Looking at the hourly chart, the low price yesterday stalled near its rising 200 hour moving average (green line). That gave the buyers the go-ahead to push higher.

In trading today, the price first pushed above the 100 hour moving average at $1912.68 currently. After a correction lower back to the 100 hour moving average, the price has since risen over the last five trading hours to the current high price of $1935.21.

What next?

Holding both the 200 hour moving average and the 100 hour moving average makes those levels the risk/bias defining levels now. The 100 hour moving average comes in at $1912.68. The 200 hour moving averages at $1905.10. Admittedly, the price has traded above and below both those moving averages since breaking back below on February 24, but the price action today is telling in that buyers leaned and seem ready to push higher.

Of course that storyline can change as well but for now as long as the price remains above, there is room to roam to the upside.

Last week, the spike high reached $1974.40. That was the highest level going back to September 2020.

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A.R Chowdhury

A.R Chowdhury

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