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
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.
- 12:30 CA CPI (Apr)
- 14:00 US New Home Sales (Apr)
*All release times are GMT
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