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

Start Forex Copy Trading your Perfect Partner – FXTM

Start Forex Copy Trading your Perfect Partner – FXTM(0)

Start Forex Copy Trading your Perfect Partner. Join ForexTime cutting-edge forex copy trading programme with ForexTime Invest and match up with a suitable trader. Let them trade while you watch your potential forex profits grow. Link:  Start Copy Trading your Perfect Partner Link:  $500 Welcome Cash Bonus Promo Link:  Receive $30 Tradeable Credit Free Bonus

150% Chinese New Year Bonus Promotion – FXCL Markets

150% Chinese New Year Bonus Promotion – FXCL Markets(0)

150% Chinese New Year Bonus Promotion to all FXCL Markets clients. Deposit any amount to your trading account and Receives 150% Chinese New Year Bonus Promotion Link:  150% Chinese New Year Deposit Bonus Link:  100% Smart Deposit Bonus Link:  130% Youtube Deposit Bonus Available to: All clients. Bonus Offer: 150% Chinese New Year Deposit Bonus

Trading Cryptocurrency with Leverage 1:1000 – NordFX

Trading Cryptocurrency with Leverage 1:1000 – NordFX(0)

NordFX clients are enjoying the ability to Forex Trading the most popular cryptocurrencies Bitcoin, Litecoin and Ethereum using a 1:1000 leverage ratio Link:  Trading Crypto with Leverage 1:1000 Link:  Demo Cup contest prize fund is $42000 Link:  100% Withdrawable Deposit Bonus Link:  55% Deposit Bonus Promotion Why should one trade with us? The trading is

Receive 55% Bonus on your Deposit Money – NordFX

Receive 55% Bonus on your Deposit Money – NordFX(0)

55% Deposit Bonus Promotion to All New and Existing Customers. 55% Bonus on Deposit Fund your account with $100 – $8,000 and receive a trading bonus up to $4,400! Link:  Demo Cup contest prize fund is $42000 Link:  100% Withdrawable Deposit Bonus Link:  55% Deposit Bonus Promotion Available to:  All new and existing accounts Bonus offer: 

Up to 100% Bonus on your initial Deposit – FXtrade777

Up to 100% Bonus on your initial Deposit – FXtrade777(0)

Up to 100% Bonus promotions on your initial Deposit to all FXtrade777 New clients. Get more for your money at FXtrade777 with an unforgettable Up to 100% Welcome Bonus. Link:  Up to 100% Bonus on your initial Deposit Bonus Offer: Up to 100% Bonus promotions on your initial Deposit to all FXtrade777 New clients. FXtrade777

FIFA World Cup Football Matches Tournament – FBS

FIFA World Cup Football Matches Tournament – FBS(0)

FIFA World Cup Football Matches Tournament. Participate in the contest and win the visit to the biggest football tournament of the year in Russia. Link: FIFA World Cup Football Tournament Link:  Just Share a Greeting Card and Gifts Link:  $50 Free Will be credited to Your Account Link:  $88.8 Forex No Deposit Bonus Link:  $123 Forex

100% Withdrawable Deposit Bonus up to $5000 – NordFX

100% Withdrawable Deposit Bonus up to $5000 – NordFX(0)

100% Withdrawable Forex Deposit Bonus up to $5000. The 100% Withdrawable Deposit Bonus and the initial deposit can be withdrawn after the required number of lots is closed. Profits can be withdrawn without restrictions. Link:  Demo Cup contest prize fund is $42000 Link:  100% Withdrawable Deposit Bonus Link:  55% Deposit Bonus Promotion Available to: All

50% First Deposit Bonus Prom – Hirose Financial UK

50% First Deposit Bonus Prom – Hirose Financial UK(0)

50% First Deposit Bonus Promo Maximum Bonus Amount is $1000 for all customers. The 50% Special Bonus offer for Hirose Financial UK customers who make a deposit to Binary Options account. They can withdraw deposit and profit at anytime!! Link:  50% Deposit Bonus Promotion Available to: All new traders Bonus Offer: 50% Special Bonus offer

200% Pending Bonus for your Next Deposits – CTTrade

200% Pending Bonus for your Next Deposits – CTTrade(0)

200% Pending Bonus for the Next Deposits. Just make the re-deposit and during the day we will credit your 200% Pending Bonus. Link:  200% Pending Bonus for the Next Deposits Available to: All new account How to get Pending Bonus? Just make the re-deposit and during the day we will credit your bonus. This bonus

Free SERENITY Tokens New Year Promotion – Grand Capital

Free SERENITY Tokens New Year Promotion – Grand Capital(0)

Receive free SERENITY tokens for Forex, futures and cryptocurrency trading. The promotions is supported by SERENITY. The objective is to promote and brand the platform as a secure trading solution for trader Link:  Receive free SERENITY tokens for trading Link:  $500 Forex No Deposit Welcome Bonus Link:  Up to 444% Profit Receive for a single

read more

Forex Featured BrokerSocial Trading

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