Fundamental Forecast for Gold: Neutral
- Gold Technical Analysis: Rally Approaching Critical Resistance during 1278
- What’s pushing bullion prices? Review DailyFX’s 2Q Gold Projections
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Gold prices fell for a second uninterrupted week with a changed steel down some-more than 1.2% to trade during 1267 forward of a New York closes on Friday. Bullion looks to tighten a month aloft by scarcely 1.4% as debility in a greenback and renewed geo-political tensions fueled demand. The convene unsuccessful during pivotal technical levels however and streamer into a May open, prices might nonetheless sojourn on a defensive.
The FOMC rate preference is on daub subsequent week and nonetheless a executive bank is widely approaching to leave process unchanged, traders will be looking for changes in a matter as Yellen Co demeanour to prep markets for arriving adjustments to a benchmark seductiveness rate. Improving labor marketplace metrics (save final month’s different miss) and a 2% review on 1Q Core PCE (Personal Consumption Expenditure) on Friday will continue to put vigour on a Fed to serve normalize policy. As it stands, markets are pricing 1-2 additional hikes this year with Fed Fund Futures observant a 67% odds of a Jun hike. That said, for bullion a importance will sojourn on a timing and range of destiny rate increases. Remember that aloft seductiveness rates will tend to import on non-yielding resources such as gold.
Highlighting a information calendar will be a recover of Apr Non-Farm Payroll total on Friday with accord estimates job for a imitation of 193K after final month’s unsatisfactory review of only 98K. Unemployment is approaching to uptick to 4.6% though we’ll be on a surveillance for serve alleviation in a labor force appearance rate to equivalent this. From a technical standpoint, a start of May trade finds prices stability to slip after responding to pivotal multi-year technical insurgency progressing this month.
- A outline of a IG Client Sentiment shows traders are net prolonged Gold- a ratio stands during +2.49 (71.3% of traders are long)
- Long positions are 8.7% aloft than yesterday and 10.6% subsequent levels seen final week
- Short positions are also 6.9% reduce than yesterday and a full 22% subsequent levels seen final week
- The build in prolonged positioning continues to indicate reduce in bullion prices. It’s value observant however that a new chasm in brief bearing does leave a evident decrease during risk streamer into a May open.
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Back on April 13th we cited expectations for “a high in bullion over a subsequent few weeks” as prices approached a pivotal long-term insurgency connection segment with “initial weekly support during a 52-week relocating average, now ~1255-60”. Indeed bullion prices surfaced on Apr 17th with a pullback contrast initial support this week during 1260– note that this turn also converges on a 2011 trendline and if damaged on a weekly tighten basis, would countenance a near-term annulment in a prices. Failure of daily RSI to pull by a 60-thrshold also warns of near-term loss momentum.
A closer demeanour during a daily draft highlights this near-term pullback with daily support seen during 1255 where a simple 23.6% retracement of a Dec allege converges on a 200-day relocating average. The near-term risk stays weighted to a downside while subsequent 1278 with a mangle subsequent 1241 changeable a concentration towards 1229 1220 – both areas of seductiveness for depletion / long-entries. Bottom line: streamer into a May open we’ll be on a surveillance for a pierce reduce into constructional support, eventually to offer some-more auspicious long-entries.
—Written by Michael Boutros, Currency Strategist with DailyFX