By Stuart McPhee
Gold for Friday, May 16, 2014
Over the last week gold has eased back from around $1315 which included a short sharp fall back down below $1300 down to support around $1290. It has now steadied and consolidated around the $1290 level for the last several days whilst trying to rally higher back to the resistance level at $1300. Prior to the fall it had done well to surge higher to around $1315 a couple of weeks ago which saw it move well off support around $1280. If gold was to retreat again back towards $1275 then a large descending triangle would be forming which would indicate lower prices below $1275. Over the last couple of months the $1275 level has established itself as a level of support and on several occasions has propped up the price of gold after reasonable falls.
Throughout the second half of March gold fell heavily from resistance around $1400 back down to a several week low near support at $1275. Both these levels remain relevant as $1275 continues to offer support and the $1400 level is likely to play a role again should gold move up higher. Through the first couple of months of this year, gold moved very well from a longer term support level around $1200 up towards a six month higher near $1400 before returning to its present trading levels closer to $1300.
Spot gold was little changed at $1,296.30 an ounce by 0021 GMT, after dropping 0.7 percent on Thursday. The metal is still up 0.6 percent for the week on earlier gains on Ukraine tensions. New applications for U.S. unemployment benefits hit a seven-year low last week while consumer prices recorded their largest increase in 10 months in April, pointing to a firming economy. Factory activity in New York state expanded at its quickest pace in nearly four years in May. Regulatory data showed that hedge fund Paulson & Co in Q1 maintained its stake in SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund as bullion prices rebounded from their biggest annual loss in 32 years in 2013, while PIMCO dissolved its gold ETF investment. Meanwhile, holdings in SPDR rose 1.79 tonnes to 782.25 tonnes on Thursday - the first inflow in a month. The London Bullion Market Association is considering outsourcing the administration of its gold forward offered rates to a third party as it prepares to implement new benchmarking regulations from the International Organization of Securities Commissions.
(Daily chart / 4 hourly chart below)
Gold May 16 at 03:25 GMT 1296.3 H: 1297.6 L: 1294.7
During the early hours of the Asian trading session on Friday, Gold is remaining quite steady right above $1295 after easing back over the last couple of days. Current range: trading right between $1295 and $1300 around $1296.
Further levels in both directions:
• Below: 1280 and 1275.
• Above: 1315 and 1330.
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 below 65% as gold remains around $1300 level. The trader sentiment remains in favour of long positions.
- 04:30 JP Capacity Utilisation (Mar)
- 04:30 JP Industrial Production (Final) (Mar)
- 09:00 EU Trade Balance (Mar)
- 12:30 US Building Permits (Apr)
- 12:30 US Housing Starts (Apr)
- 13:55 US Univ of Mich Sent. (Prelim.) (May)
*All release times are GMT
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