Gold – Eases Back towards Key $1200 Level

Gold for Thursday, April 30, 2015

Gold is consolidating after its recent surge higher to break through the key $1200 level and then easing back to this level which is where it is presently trading.  To start this new week Gold was trying to rally higher and regain lost ground from the end of last week which saw it drop to near $1175. The support at $1180 did well to keep it propped up. 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, although to close out last week it drifted lower and fell to a one month low. 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 fell on Wednesday, extending the session’s losses after the U.S. Federal Reserve signaled it was taking a meeting-by-meeting approach on when to raise interest rates for the first time since 2006.  Following a two-day meeting, the Federal Reserve pointed to weakness in the U.S. labor market and economy, a sign it is struggling with plans to raise interest rates this year.  Spot gold fell to a session low of $1,201.13 after the Fed statement, and was last trading below $1,204. It had gained nearly 3 percent in the last two sessions, climbing to a three-week high of $1,215 on Tuesday.  U.S. gold futures for June delivery closed down $3.90 an ounce to $1,210 an ounce, after rising to their highest level since April 7 in the previous session.  “The market is reading that the Fed hasn’t materially moved its liftoff time frame despite recent weakness in economic growth and employment,” said Tai Wong, director of metals trading at BMO Capital Markets in New York.  “The market is reading that the Fed isn’t over-emphasizing the winter slowdown and the poor March payrolls.”

(Daily chart / 4 hourly chart below)

Gold April 30 at 01:10 GMT   1205.2   H: 1214.1   L: 1201.4

Gold Technical

S3

S2

S1

R1

R2

R3

1180

1150

—

1240

1300

—

During the early hours of the Asian trading session on Thursday, Gold is consolidating after its recent easing back to the key $1200 level.  Current range: trading right above $1200.

Further levels in both directions:

• Below: 1180 and 1150.

• Above: 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 near 65% as it has eased back to the key $1200 level. The trader sentiment is in favour of long positions.

Economic Releases

23:30 (Wed) AU AIG Manufacturing PMI (Apr)

23:50 (Wed) JP CPI Core (Nation) (Mar)

23:50 (Wed) JP CPI Core (Tokyo) (Apr)

23:50 (Wed) JP Real Household Spending (Mar)

23:50 (Wed) JP Unemployment (Mar)

01:30 AU Export & Import price index (Q1)

01:30 AU Private Sector Credit (Mar)

03:00 JP BoJ Policy Statement and Governor Kuroda Press Conference

05:00 JP Construction orders (Mar)

05:00 JP Housing starts (Mar)

06:00 JP BoJ Publish Semi Annual Outlook Report

08:00 EU ECB Publish Monthly Bulletin

09:00 EU Flash HICP (Apr)

09:00 EU Unemployment (Mar)

12:30 CA GDP (Feb)

12:30 US Core PCE Price Index (Mar)

12:30 US Employment cost index (Q1)

12:30 US Initial Claims (25/04/2015)

12:30 US Personal income & spending (Mar)

13:45 US Chicago PMI (Apr)

* All release times are GMT

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