Gold – Drifts Below Key $1200 Level

Gold for Friday, April 10, 2015

Despite some positive signs, gold has eased over the last few days back through the key $1200 level.  In the week prior 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.  A couple of weeks ago 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. It still has its eyes firmly on the key $1200 level and it will be interesting to see whether it can remain above this level and continue to receive support. Prior to the recent move, gold remained quite steady enjoying strong support from the $1150 level whilst some eyes would have been looking lower. The next obvious technical support level lower is around $1130, and if it was to move through this level, then it would be trading at multi-year lows and looking very bearish. When gold broke through the rock solid support level at $1200 recently, it opened itself up to some potential downside which was played out a couple of weeks ago.

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 retreated for a third straight session on Thursday on a stronger dollar after Federal Reserve officials kept alive expectations for an interest rate rise some time this year despite recent weak economic data.  New York Fed President William Dudley and Fed Governor Jerome Powell on Wednesday sketched out scenarios in which the central bank could make an initial move earlier than many now expect, then move slowly on further increases.  Minutes from the Fed’s March 17-18 meeting showed officials opening the door to a June rate rise.  Spot gold fell back below $1,200 an ounce after the minutes and comments and was trading down 0.6 percent at $1,203 an ounce.  U.S. gold for June delivery dropped about $8 an ounce to $1,195.  The metal retreated more than 2 percent from a seven-week high of $1,224.10 hit on Monday, after U.S. jobs data raised expectations the Fed would delay a rate rise.

(Daily chart / 4 hourly chart below)

Gold April 10 at 00:20 GMT   1194.5   H: 1203.6   L: 1192.8

Gold Technical

S3

S2

S1

R1

R2

R3

1200

1150

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1240

1300

—

During the early hours of the Asian trading session on Friday, Gold continues to edge lower below $1200.  Current range: trading right below $1195.

Further levels in both directions:

• Below: 1200 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 above 60% as it has eased lower back to below $1200 after its recent surge higher to above $1220. The trader sentiment is in favour of long positions.

Economic Releases

01:30 AU Housing & Lending Finance (Feb)

08:30 UK Construction Output (sa) (Feb)

08:30 UK Industrial & Manufacturing Production (Feb)

12:15 CA Housing starts (Mar)

12:30 CA Unemployment (Mar)

12:30 US Import Price Index (Mar)

14:00 UK NIESR GDP Est. (Mar)

18:00 US Budget (Mar)

* All release times are GMT

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