Subscribe to RSS

Gold’s next move could be huge, but which direction will it be?

Gold ended last week only marginally lower thanks to Friday’s noticeable bounce which saw the precious metal momentarily surpass the $1100 handle. Friday’s counter-trend move was partly in response to news that the second quarter US Employment Cost Index (ECI) showed a very small rise of 0.2% in wage pressure. Traders responded to the data by booking some profit on their long dollar and short gold positions as the month drew to a close. Nevertheless, the yellow metal still ended the month of July with a huge 6.5% loss, which represented its biggest monthly decline since June 2013 when it had dropped by a whopping 12 per cent.

As the new week begins, the precious metal is finding itself back in the more familiar territory of around $1090. Despite the weaker ECI report on Friday and today’s overall weaker-than-expected US macro numbers, gold traders remain wary of a potential rate hike in as early as September or December.  They argue that the strong recovery in the US labour market, if sustained, may ultimately put upward pressure on wages and in turn on prices in the coming months. In anticipation of this possibility, the Fed may start tightening monetary policy sooner rather than later so as to reduce the risks of overcooking inflation. But at the moment, inflation is running at extremely low levels across the globe which is another reason why gold is not doing that well.  Indeed, the metal is coming under pressure from all angles. Not only has the physical demand from China been weak but optimism among money managers in the paper market is also falling. This is evidenced, for example, by another 8 per cent increase in net short positions in the week to 28 July, according to the CFTC.

With short gold positions being at a fresh record high, the correction potential is also very high now. For gold to stage a noticeable rally, it will first have to climb above the resistance level of $1100 and hold there on a closing basis. This could happen given that the metal has already reached a Fibonacci extension area between $1083 and $1093. As the RSI is also at an oversold level of below 30, this area thus marks a potential exhaustion point for gold. If gold does correct from here, it may go on to ‘fill’ the area of inefficiency that was created as a result of the sell-off last month (highlighted in red). Consequently, gold could rally towards the old broken supports at $1131.5 or $1143.0, levels that could then turn into resistance.

That being said, sentiment is very bearish on gold and it wouldn’t take much to push the price of the yellow metal below the aforementioned Fibonacci exhaustion area on a daily closing basis. If seen, this may give rise to further follow-up technical selling which could see the metal drop viciously towards the next Fibonacci extension level at $1023 (161.8% extension of the XA swing) where it will also meet the extended point D of an AB=CD pattern. Thereafter is the psychologically-important level of $1000 and then the triangle breakdown measured target around $975.00.

So, gold’s next move could be a sharp one once it breaks out of the recent consolidative range. We could see this breakout at some point this week’s as more US labour market indicators are released prior to Friday’s official jobs report, causing the dollar and in turn gold to move sharply.

Figure 1:

gold

Source: FOREX.com.

0 commentsback to post

Add your comment

Nickname:
E-mail:
Website:
Comment:

Other articlesgo to homepage

300% Trad-able Special Bonus Promotion – MarketsYes

300% Trad-able Special Bonus Promotion – MarketsYes(0)

300% Forex Tradable Special Bonus Promotion All New and existing clients. MarketsYes is offering all prospective clients deposit for up to 3000 USD/EUR/GBP a 300% Tradable Special Bonus. Link:  300% Tradable Bonus Promotion Available to: All New and existing clients Ending Date: 31 December 2017 Bonus offer:  300% Tradable Special Bonus Promotion All New and

100% Deposit Bonus and Forex Free Signals – Trade12

100% Deposit Bonus and Forex Free Signals – Trade12(0)

Forex Free Trading Signals via SMS. EMAIL. SKYPE. WHATSAPP and 100% Welcome Deposit Forex Bonus to your Live Trading Account. Link:  Free Daily Forex Trading Signals Link:  Get 100% Welcome Deposit Bonus Link:  Forex Trade and Win 2 Tickets Available to: All new clients Ending Date: 31 December 2017 Bonus Offer: Get 100% Welcome Deposit

100% New Account Bonus Up to $300 – Ava Trade

100% New Account Bonus Up to $300 – Ava Trade(0)

100% New Account Deposit Bonus to your first deposit Up to $300. Start trading today and in honour of our Irish roots we’ll give you a St. Patricks Day special bonus of up to 100% Link:  100% Special Bonus to Your First Deposit Available to: All new account Ending Date: 31 December 2017 Bonus offer:

$20 Phone Validation Welcome Forex Bonus – LMFX

$20 Phone Validation Welcome Forex Bonus – LMFX(0)

$20 Phone Validation Welcome Forex Bonus to All New Traders. The $20 Phone Validation Forexc Bonus is available for all the Clients who have successfully opened and funded their trading account with the Company in accordance with the Account Opening Agreement. Link:  $20 Phone Validation Welcome Forex Bonus Available to: All new traders Ending Date:

Live Trading Competition & 20% Deposit Bonus – FirewoodFX

Live Trading Competition & 20% Deposit Bonus – FirewoodFX(0)

Forex Live Account Trading Competition and 20% Forex Deposit Bonus . FirewoodFX presents the forex live account Trading Competition 1 with cash prize more than $1000! Be the winner by achieving the highest profit! Link: Live Account Trading Competition Link: 20% Bonus Make $100 Deposit or More Available to: All new and existing Ending Date:

$50 Free Bonus Without a Deposit – Adamant Finance

$50 Free Bonus Without a Deposit – Adamant Finance(0)

Free $50 Forex No Deposit Welcome Bonus to all new Traders. Receive $50 for Forex Free Bonus Without a Deposit and test the terms on a real account, without transfering any money. Link:  $50 No Deposit Free Welcome Bonus Ending Date: 31 December 2018 Available to: All new Traders Bonus Offer: Free $50 Forex No

Binary Options Free Demo Trading Tournament – CBFinvest

Binary Options Free Demo Trading Tournament – CBFinvest(0)

Binary Options Free Demo Trading Tournament total 2000$ cash prizes. Any Spotoption brand can start offering immediately binary options Tournaments, without spending a fortune on programming and without waiting for months Link:  Binary Options Free Demo Tournament Available to: All Customers AMAZING FEATURES Rebuys – for Tournaments based on demo, the feature of Rebuys allows

Risk Free Trading plus Free Forex Signals – MarketsYes

Risk Free Trading plus Free Forex Signals – MarketsYes(0)

300% Forex Deposit Bonus Promotion and Forex Risk Free Trade plus Forex Free Signals All New and existing clients. MarketsYes is offering all prospective clients deposit for up to 3000 USD/EUR/GBP a 300% Tradable Bonus. Link:  300% Tradable Bonus Promotion Link:  Risk Free Trade plus Forex Free Signals Available to: All New and existing clients

50% Bonus of Every Deposit – Fort Financial Services

50% Bonus of Every Deposit – Fort Financial Services(0)

Up to 50% Bonus of Every Deposit to All New and Existing Traders. You Deposited $1000 on your account, chose a 50% bonus and got 500 extra dollars to the initial deposit amount. Link: Up to 50% Bonus of Every Deposit Link: $5 Forex No Deposit Welcome Bonus Link: 15% Support Margin Bonus Link:  Profit

123% Tradable Deposit Bonus Promotion – FreshForex

123% Tradable Deposit Bonus Promotion – FreshForex(0)

Get 123% Tradable Deposit Bonus Promotion gives a real chance to start Forex trading with low investment and double return. Start efficient Forex trading with Tradable Bonus 123% Campaign. Link:  123% Tradable Deposit Bonus Promotion Link:  $5 Forex No Bonus Promotion Ending Date:  31 December 2017 Available to:   New Clients only Bonus Offer: Get 123%

read more

Forex Featured Broker

Contacts and information

ForexDepositNews.com Forex Deposit Bonus, Forex No Deposit Bonus, Forex Live Contest, Forex Demo Contest, Free Forex Bonus Forex Brokers Review and Other All Forex promotions.

ForexDepositNews.com

Social networks

Most popular categories