Gold for Wednesday, May 6, 2015
To start this new week gold has enjoyed support at $1180 which has allowed it to rally back to $1190 and beyond to resistance at $1200. In recent hours it has eased back a little and is presently consolidating around $1195. To finish last week gold fell sharply back down through the key $1200 level down to below another support level around $1180, before dropping further to a six week low below $1170. To start last week gold was trying to rally higher and regain lost ground from the end of the previous week which saw it drop to near $1175. The support at $1180 did well to keep it propped up as it has done again in recent hours. In the last couple of weeks, gold has traded in a narrow range right around the key $1200 level and this range had been getting tighter. Gold has had an attraction to the key $1200 level as every time it ventures away it returns quickly to trade right around it. Several weeks ago gold sprung to life surging higher away from the key $1200 level back to a seven week high above $1220 before easing back and finding some support at the key $1200 level. Back at end of March gold eased a little for a few days to below $1185, although for the best part of the last few weeks gold has moved strongly off the support at $1150 and then found some new support from the $1200 level.
Throughout the second half of February gold enjoyed rock solid support from the key $1200 level which held it up on numerous occasions. For about a month gold drifted steadily lower down to a one month low near the key $1200 level before finding the solid support at this key level. At the beginning of December gold eased lower away from the resistance level at $1240 yet again back down to below $1200. During the second half of November gold made repeated runs at the resistance level at $1200 failing every time, before finally breaking through strongly. Throughout the first half of November gold enjoyed a strong resurgence back to the key $1200 level where it has met stiff resistance up until recently.
Throughout the second half of October gold fell very strongly and resumed the medium term down trend falling from above $1250 back down through the key $1240 level, down below $1200 to a multi year low near $1130. It spent a few days consolidating around $1160 after the strong fall which has allowed it to rally higher in the last couple of weeks. Earlier in October gold ran into the previous key level at $1240, however it also managed to surge higher to a five week high at $1255. In late August gold enjoyed a resurgence as it moved strongly higher off the support level at $1275, however it then ran into resistance at $1290. In the week prior, gold had been falling lower back towards the medium term support level at $1290 however to finish out last week it fell sharply down to the previous key level at $1275.
Gold rose one percent on Tuesday as the dollar paused and global shares fell ahead of U.S. non-farm payroll data later in the week that could give clues as to when the Federal Reserve will raise interest rates. Spot gold fell initially then firmed 0.5 percent to $1,193 an ounce. U.S. gold futures for June delivery were up $6 an ounce at $1,193. “Gold was firm yesterday and is continuing the trend today, with dollar weakness helping,” Deutsche Borse’s MNI senior analyst Tony Walters said. The dollar pared earlier gains to trade flat against a basket of major currencies. Gold fell to a six-week low of $1,170 on Friday after the Federal Reserve indicated it saw a slowdown in the U.S. economy as transitory and did not rule out a rate rise this year. “U.S. data will continue to be very important — if it’s good, we will eventually get lower gold prices,” Natixis analyst Bernard Dahdah said. However, with a rate hike now likely in September rather than June, gold prices will probably remain in the current range for longer and will not drop as quickly as previously thought, Dahdah added.
(Daily chart / 4 hourly chart below)
Gold May 6 at 00:45 GMT 1194.6 H: 1200.1 L: 1185.8
Gold Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1180 | 1150 | — | 1200 | 1240 | 1300 |
During the early hours of the Asian trading session on Wednesday, gold is consolidating above $1190 after its recent rally back towards $1200. Current range: trading right around $1195.
Further levels in both directions:
• Below: 1180 and 1150.
• Above: 1200, 1240 and 1300.
OANDA’s Open Position Ratios
(Shows the ratio of long vs. short positions held for gold among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)
The long position ratio for gold has moved back to below 70% as it has surged back up to the resistance level at $1200. The trader sentiment is strongly in favour of long positions.
Economic Releases
- 01:30 AU Retail trade (Mar)
- 08:00 EU Composite PMI (Apr)
- 08:00 EU Services PMI (Apr)
- 08:30 UK CIPS/Markit Services PMI (Apr)
- 09:00 EU Retail Trade (Mar)
- 12:15 US ADP Employment Survey (Apr)
- 12:30 US Non Farm Productivity (Prelim.) (Q1)
- 12:30 US Unit Labour Costs (Prelim.) (Q1)