Gold for Wednesday, May 13, 2015
In the start of this new week, gold has continued to trade in a very narrow range right around $1190, being supported from the $1180 area. To start last week, gold enjoyed support at $1180, which allowed it to rally back to $1190 and beyond to resistance at $1200; however, it has remained within this range, and is presently consolidating around $1190. A couple of weeks ago, 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 that 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. Over the last couple of months, gold has had an attraction to the key $1200 level, as every time it ventures away, it returns quickly to trade right around it.
Back at the 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 up to 1 percent on Tuesday as the dollar and European shares suffered from a sell-off in global bond markets, although higher real yields kept prices under $1,200 an ounce. Spot gold touched a session high of $1,196.60 an ounce and was last up 0.8 percent at $1,192.90, while U.S. gold futures for June delivery settled $9.40 higher at $1,192.40 an ounce. The dollar index, which measures the U.S. currency against a basket of major peers, fell 0.5 percent and helped support gold prices. U.S. 10-Year yields, which have been driven higher in recent weeks by higher German Bunds, rose to a six-month high above 2.3 percent before losing ground. Rising yields usually weigh on gold, as they increase the opportunity cost of holding non-yielding bullion. While that pressure has been offset by weakness in other markets, gold remains vulnerable to a further jump in yields. Gold was helped by a sharp decline in European shares, as it is usually seen as an hedge against risk. “Today it is two to one in favor of rising gold — weak U.S. dollar and weak stocks versus rising bond yields,” Commerzbank analyst Carsten Fritsch said, “only one factor needs to switch sides to tip the balance.”
(Daily chart / 4 hourly chart below)
Gold May 13 at 00:50 GMT 1192.6 H: 1197.4 L: 1180.8
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 around $1190 after its recent rally back towards $1200. Current range: trading right above $1190.
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 above 70% as it has consolidated around $1190. The trader sentiment is strongly in favour of long positions.
Economic Releases
- 23:50 (Tue) JP M2 Money Supply (Apr)
- 01:30 AU Wage Price Index (WPI) (Q1)
- 08:30 UK Average Earnings (incl. bonus) (Mar)
- 08:30 UK Claimant Count (Apr)
- 08:30 UK ILO Unemployment Rate (Mar)
- 09:00 EU GDP (1st Est.) (Q1)
- 09:00 EU Industrial production (Mar)
- 09:30 UK BoE Releases Quarterly Inflation Report
- 11:30 EU ECB minutes of previous meeting to be released
- 12:30 US Import Price Index (Apr)
- 12:30 US Retail Sales (Apr)
- 14:00 US Business inventories (Mar)
- JP Economy Watchers Survey (Apr)
- WLD IEA release monthly oil market report