Gold steps further away from 2015 high

Source: Dukascopy Bank SA
  • 42% of open positions are long
  • Strong resistance between 1,282.50 and 1,280 dollars
  • Today's outlook is bearish
  • Economic events to watch over the next 24 hours: UK Referendum
Demand for safer assets appears to be building up, as during the last nine hours the precious metal has already negated yesterday's 0.5% decline.

On the second day of the Federal Reserve Governor's testimony on Wednesday, Janet Yellen stated that a number of risks for the US economy is still present, thus, the Fed is taking a cautious approach to the monetary policy and the interest rate hike this year in general. One of the mentioned risks was the remaining weakness in the labour market, with the bullish trend continuing to slow down, justifying the Fed's decision to postpone June's interest rate hike. Among other reasons mentioned, Janet Yellen said that business investment was low and the energy sector suffered from low oil prices for years. Nevertheless, the long-term expectations for the US economy remain advantageous, despite some arisen factors providing difficulties. Furthermore, the possible interest rate hike in July is now expected to be delayed by most economists, with the next probability shifting to September.

In the meantime, the US Existing Home Sales figures fell in line with expectations, having risen to the highest in nine years. Low mortgage rates caused the desired effect, with Home Sales up 1.8% to 5.53 million (annualised) in May, as reported by the national Association of Realtors. Apart from the mortgage rates, rising employment and stock prices improved consumer sentiment, but growing home prices could still bring the figures down.

Watch More: Dukascopy TV


Gold - destination of funds in case of 'Brexit'



Gold, along with the other safe haven instruments, such as CHF and JPY, will become the most likely destination of funds in case the citizens of the United Kingdom decide to leave the European Union. Conversely, if the island nation votes to stay, the gold will likely lose amid the bid for riskier currencies. However, the risks are seen as disproportionate, as the 'leave' vote is expected to have a stronger effect on gold than the 'stay' result.



Gold steps further away from 2015 high

Gold keeps moving away from the 2015 high, being unable to surpass this resistance neither in May nor this month. Nevertheless, we may expect more attempts of the bulls to push the price over the 1,307 dollar barrier, as indicators are pointing north in all three relevant time frames. The immediate resistance is at 1,280 dollar, and if it is broken, the rate will be in a good position to re-visit last year's maximum. Meanwhile, the extension of the decline is to meet a combination of the 55-day SMA and weekly S2 at 1,257/53.

Daily chart
© Dukascopy Bank SA

Hourly chart also suggests bearishness for gold in the near term. The instrument is currently trading below the 200-hour SMA, although in case of a rally the price may stop already near 1,280 dollar, a level that proved to be important in the second half of May. Meanwhile, there seem to be no trustworthy nearby supports to prevent an extension of the current sell-off.

Hourly chart
© Dukascopy Bank SA


Sentiment among the brokers is mixed

The sentiment in the SWFX market remains bearish, although not as strong as five days ago, when the difference amounted to 33 percentage points. At the moment, 42% of open positions are long and 58% are short.

Elsewhere, traders have a different opinion. Thus, a significant majority of the OANDA traders, namely 61% of them, are currently long the bullion, although only 52% were bullish just 24 hours ago. To a lesser extent but also bullish are SAXO Bank traders, 55% of whom are holding long gold positions.

Spreads (avg,pip) / Trading volume / Volatility


Market participants foresee the price of gold at 1,275 by the end of August

Traders who were asked regarding their longer-term views on gold between May 22 and June 22 expect, on average, to see the metal around 1,275 by the end of August. Generally, 60% (-12) of participants believe the price will be generally above 1,250 in ninety days. Alongside, 30% (-2%) of those surveyed reckon the price will trade in the range between 1,100 and 1,250 over the next three months

© Dukascopy Bank SA

Actual Topics

Subscribe to "Fundamental Analysis" feed

Subscribe
To learn more about Dukascopy Bank CFD / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
For further information regarding potential cooperation,
please call us or make callback request.
To learn more about Dukascopy Bank Binary Options / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
To learn more about Dukascopy Bank CFD / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
To learn more about Crypto Trading / CFD / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
To learn more about Business Introducer and other trading related information,
please call us or make callback request.
For further information regarding potential cooperation,
please call us or make callback request.