Precious metals markets took it on the chin this week as better than expected data in the U.S. highlighted by a better than expected jobless claims release Thursday morning as the trigger for the sell -off. Gold futures plunged on Thursday 2.3 percent or $27.60 as jobless claims fell to a decade low prompting thoughts that the data dependent Federal Reserve would become hawkish. Last week’s commitment of traders report showed speculative and fund positions net long 115K contracts. I believe some of these net longs liquidated shortly following the jobless claims release. It’s possible that the rekindled rate hike talk and a short covering rally in the US dollar will combine to put more pressure on the gold market potentially taking it down to the 1150-1160 area in the near term. It will be key to see rises in volume and open interest as evidence of accumulation for the yellow metal as we have seen previously in November 2014 and March 2015, when gold prices touched down to 1130 and the 1150 level respectively.
Gold for June delivery today scaled an intra- day high of 1184.4 and a low of 1168.4 before slightly firming near the close. Gold hit its highest since early April at $1,215 earlier this week, but failed to hold that level after the Federal Reserve signaled on Wednesday that it sees the recent slowdown in the U.S. economy as transitory, not ruling out an interest rate rise this year. Strong data could shore up expectations the Fed is still on track to raise rates this year, most likely in the fall, which would lift the opportunity cost of holding non-yielding bullion while boosting the dollar. Holdings of the SPDR Gold Shares (ARCA:GLD), the world’s largest gold-backed exchange traded fund remained unchanged at 739.06 tons.
Weekly Swing #s GCM 15 May 4th through May 8th, 2015
Resistance #2- | 1232.4 |
Resistance #1- | 1203.4 |
Pivot #- | 1195.9 |
Support #1- | 1156.9 |
Support #2- | 1172.8 |