Gold – Consolidates Around One Month High at $1220

Gold for Friday, May 15, 2015

At the start of this week, Gold traded in a very narrow range right around $1190 being supported from the $1180 area, however it has surged to a one month high just shy of $1220 in the last couple of days before consolidating a little.  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 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 closed at a three-month high on Thursday as the dollar came under pressure following a new batch of mixed U.S. data that pushed back expectations of when interest rates in the world’s largest economy will rise.  Initial claims for state unemployment benefits slipped last week close to a 15-year low reached last month, but other data showed that a strong dollar and lower oil prices suppressed producer inflation in April.  U.S. gold futures for June delivery settled up $7.00 at $1,225.20 an ounce, its highest since February 13.  Spot gold rose to the highest since Feb. 17 at $1,226.20 an ounce and was trading up 0.5 percent at $1,221.83 an ounce.  A close above the $1,225 area was expected to trigger sustained buying interest, MKS SA head of trading Afshin Nabavi said.  The metal was also heading for its biggest weekly gain in five months, mostly aided by an almost 2 percent increase on Wednesday after the dollar first tumbled to three-month lows, after flat U.S. retail sales releases.  “I’m forecasting gold to average $1,200 this quarter, as a slightly weaker dollar will continue to be supportive until we see some stronger data points,” Citigroup strategist David Wilson said.

(Daily chart / 4 hourly chart below)

Gold May 15 at 00:30 GMT   1221.78   H: 1227.7   L: 1212.4

Gold Technical

S3

S2

S1

R1

R2

R3

1180

1150

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1240

1300

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During the early hours of the Asian trading session on Friday, Gold is consolidating right above $1220 after its recent surge higher. Current range: trading right above $1220.

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 below 60% as it has surged higher to near $1220. The trader sentiment is strongly in favour of long positions.

Economic Releases

05:00 JP Consumer Confidence (Apr)

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

12:30 CA Manufacturing sales (Mar)

12:30 US Empire State Survey (May)

13:15 US Capacity utilisation (Apr)

13:15 US Industrial production (Apr)

14:00 US Univ of Mich Sent. (Prelim.) (May)

20:00 US Net Long-term TICS Flows (Mar)

* All release times are GMT

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