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

Up to $250 Cash in Your Expert Advisor – ThinkMarkets

Up to $250 Cash in Your Expert Advisor – ThinkMarkets(0)

Up to $250 Cash in Your Expert Advisor. Make the Move to Think Trader and Cash in Your Expert Advisor for Up to $250* Link:  Up to $250 in Your Expert Advisor Available to: All new account Ending Date: 31 December 2017 Bonus offer: Up to $250 Cash in Your Expert Advisor Bonus to all new

$30 Forex No Deposit Bonus Welcome Promo – XM

$30 Forex No Deposit Bonus Welcome Promo – XM(0)

$30 Forex  No Deposit Bonus Welcome Promo Bonus and 15% Welcome Deposit Bonus, Welcome Bonus brings Real Account clients the best rewards available. Entering the markets and trading with XM enables you to earn from your trades and build your own bonus up to a maximum of $1,000. Link:  $30 Forex No Deposit Bonus Link: 

50% Re-Deposit & 100% Tradable Bonus – Xtream Forex

50% Re-Deposit & 100% Tradable Bonus – Xtream Forex(0)

50% Re-Deposit Tradable Forex Bonus for all of its traders. Every existing and new trader is eligible for this Re-Deposit Tradable Bonus for depositing into their trading account. Link:  100% Tradable Deposit Bonus Link:  35% Deposit Cash Bonus Link:  50% Re-Deposit Forex Bonus 50% Re-Deposit Forex Bonus XtreamForex is glad to announce 50% re-deposit forex

Free $50 No Deposit Bonus and Start Trading – Trade360

Free $50 No Deposit Bonus and Start Trading – Trade360(0)

$50 Forex No Deposit Bonus is available only once for each client. Every verified user can use $50 No Deposit Bonus and get one or several investment accounts. Link:  $50 Forex No Deposit Required Bonus Link:  $280 CashBack Rewards Program Available to: All new account Ending Date: 31 December 2017 Bonus offer: $50 New No

200% Cashback Rebate Bonus up to $10000 – ForexTime

200% Cashback Rebate Bonus up to $10000 – ForexTime(0)

200% Forex Cash back Rebate Bonus up to $10,000, whether they’re first time depositors or returning clients. and get $4 Cashback back for every lot you trade. Link:  Loyalty Cashback Promotions Link:  200% Cashback Rebate up to $10000 Ending Date: 31 December 2017 Available to: All Customers Bonus Offer: ForexTime Rewards Loyalty in Withdrawable Cashback

$50 Free No Deposit Credit Bonus Promotion – GDMFX

$50 Free No Deposit Credit Bonus Promotion – GDMFX(0)

$50 No Deposit Credit Bonus Promotion 2017 to all new account. The $50 no-deposit bonuses is available for clients who open their first registration with GDMFX Link: $50 No Deposit Credit Bonus Promotion Available to: All new account Ending Date: 31 December 2017 Bonus offer: $50 No Deposit Credit Bonus Promotion 2017 to all new account.

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 Bonus to your Live Trading Account. Link:  Free Daily Forex Trading Signals Link:  Get 100% Welcome Deposit Bonus Link:  50% Exclusive Deposit Bonus Available to: All new clients Ending Date: 31 December 2017 Bonus Offer: Get 100% Welcome Deposit Bonus Plus 7-day

100% Special Bonus to Your First Deposit – AvaTrade

100% Special Bonus to Your First Deposit – AvaTrade(0)

100% Fx Special Bonus Offer to your first deposit Up to $300. Start trading today and in honor of our Irish roots we’ll give you a St. Patrick 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:

$10 Free No Deposit Welcome Bonus 2017 – Hirose UK

$10 Free No Deposit Welcome Bonus 2017 – Hirose UK(0)

$10 Free no deposit bonus binary options. Campaign Period: From 1st January 2017 to 31st December 2017. The $10 Free bonus will then become withdrawable, and we will send funds to where you have made a deposit from. Link:  $10 Free Bonus for Binary Options Link:  50% First Deposit Bonus Available to: All new Binary

$25 Free Bonus Forex and Binary Options – MarketsYes

$25 Free Bonus Forex and Binary Options – MarketsYes(0)

$25 Free No Deposit Bonus Forex / CFD and Binary Options . in order to get the Free No Deposit Bonus they must register and during the registration it will be a place to paste the coupon code: wl25cm . Link:  300% Tradable Bonus Promotion Link:  $25 No Deposit Welcome Bonus Link:  100% Holiday Cheer

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