Trading insights: Can softer gold prices lift the Dow Jones?

Market Talk

• Dow Jones Industrial Average (DJIA) edges higher after a rocky week, but August data shows bulls may have a narrow advantage.
• Gold prices trade flat, around $1,918 mark
• Can weaker Gold prices lift the Dow back to 35000?

Dow Jones Technical Analysis

Dow Jones futures (DJIA) have opened the week higher, after shedding 2.22% last week. With prices currently trading around 34680, the question remains whether or not buyers have the ability to drive prices back towards 35000.

When analyzing Dow’s performance historical performance during the last 13 years for the month of August, data reveals that bulls have maintained a narrow advantage:

• Six times during the the month of August the Dow Jones Global Index closed lower
• Seven times during the the month of August the Dow Jones Global Index closed higher

Bottom line: The only constant observation is that regardless of whether August was a positive or negative month for global stock markets, over the longer term the Dow Jones Global Index suggests that in general global stock markets have moved higher.

The above chart illustrates the Dow Jones Global Index 13 year percentage performance with flags that identify each August during each year. Red flags signify August down months, green flags signify August up months.

However, past performance is not indicative of future performance.

Trading prospective:

Gold - clears below the key support, outlook remains bearish

Technical commentary: Gold

Current gold price $1,889 has now pierced below the key support at $1,890 (see chart). This piercing below of a key support level could support the case for bearish conditions to prevail. Downside prospects for price to move towards the $1,830s can not be ruled out, while upside risk seen above the $1,935 resistance (see chart).

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