Gold - Remains Steady Around $1295

Includes: GLD
by: Dean Popplewell

By Stuart McPhee

Over the last couple of weeks gold has eased back from around $1315 which included a short sharp fall back down below $1300 down to support around $1290, which has it remaining within its current wider range between $1275 and $1315. For smaller ranges, gold has remained quite steady around the $1295 level for some time now, which is where it remains presently. It is clearly trying to rally higher back to the resistance level at $1300, and earlier this week and about 24 hours ago, it did jump up above $1300 before falling back down just as quickly. It had done well to surge higher to around $1315 a few 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 weeks 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.

Gold settled higher on Thursday after the U.S. Federal Reserve indicated no intention to raise interest rates soon, but a drop in holdings of the top bullion-backed fund to a five-year low kept gains in check. Minutes of the Federal Reserve's late April meeting released on Wednesday showed policymakers had discussed exit strategies from its ultra-loose monetary policy. But they also made clear the Fed was not ready to "normalize'' policy or raise interest rates anytime soon, reassuring investors. Increased central bank liquidity and a low interest rate environment were important factors leading to gains in gold in previous years. U.S. gold futures for June delivery ended $6.90 higher at $1,295.00 an ounce. Meanwhile, spot gold rose 0.3 percent to $1,295 an ounce, after closing between $1,291 and $1,296 for the past five sessions.

(Daily chart / 4 hourly chart below)

Gold May 23 at 00:40 GMT 1294.2 H: 1294.5 L: 1293.3

Gold Technical

S3 S2 S1 R1 R2 R3
1280 1275 --- 1315 1330 ---

During the early hours of the Asian trading session on Friday, Gold is continuing to consolidate and trade in a small range between $1294 and $1295 after moving strongly lower from above $1305 earlier this week. Current range: trading right between $1290 and $1295 around $1294.

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 right back to 65% again as gold remains around the $1295 level. The trader sentiment remains in favour of long positions.

Economic Releases

  • 12:30 CA CPI (Apr)
  • 14:00 US New Home Sales (Apr)

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.