Gold finds support at 1,326 on Monday

Source: Dukascopy Bank SA
  • 54% of all SWFX open positions are short
  • Gold had been falling for the past three trading sessions
  • Economic events to watch over the next 24 hours: Fed's Lockhart's Speech; Fed's Kashkari's Speech; Fed's Brainard's Speech;
The yellow metal found support on early Monday morning, as it rebounded. However, the rebound is insufficient to be called a surge, as the metal is squeezed between the monthly PP and various resistance levels. It is most likely that the change of direction for the bullion is not going to happen during today's trading session. Moreover, new aggregate technical indicators forecast no changes in the metal's price during today's trading session. However, on a weekly timeframe a surge is forecasted.

On Thursday September 8, the European Central Bank decided to leave interest rates in the single currency area unchanged, but being open for more cuts in the upcoming months and renewed calls to politicians to apply more stimulus for the economic recovery. As a result, the ECB held the single currency area's main interest rate at zero. Also, the European Central Bank left its 1.7 trillion euro stimulus programme unchanged, brushing off concerns over economic shock waves from Britain's decision to leave the European Union. However, the ECB president Mario Draghi noted that uncertainty over the Brexit was among the factors dampening the Euro zone's growth and he unveiled a slightly weaker economic outlook for the bloc. Although, the ECB did not even discuss extending its 80 billion (per month) asset purchase programme, as president Mario Draghi noted "not so substantial to warrant a decision to act". The ECB President Mario Draghi also stayed that he is concerned over persistently low Euro zone inflation, which has fallen short of the ECB's near-2% target for more than three years. According to the fresh ECB staff forecasts, inflation rising very gradually, to 1.2% next year and 1.6% in 2018.

The number of Americans filing for unemployment benefits dropped unexpectedly last week, official data revealed on Thursday. According to the Labor Department, initial jobless claims fell 4,000 to a seasonally adjusted 259,000 in the week ended September 3, touching the lowest level since mid-July and following the preceding week's reading of 263,000. Market analysts anticipated a slight increase to 264,000 filings in the reported period. Last week's numbers market the 79th consecutive week of initial jobless claims remaining below the 300,000 level, the longest streak since 1973. There were no special factors influencing last week's claims data; however, jobless claims for Virginia, New Mexico, Alabama, Minnesota, Hawaii and Puerto Rico were estimated amid the Labor Day celebrated on Monday. Furthermore, the four-week moving average of initial jobless claims, considered a better measure of labor market trends, declined 1,750 to 261,250 during the same week. Meanwhile, the number of continuing jobless claims dropped 7,000 to 2.14 million in the week ending August 27, whereas the four-week moving average of continuing claims decreased 4,000 to 2.15 million. The claims data together with the latest JOLTS report suggest that the trend in employment growth remains strong.

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Upcoming fundamentals: Fed speakers

Monday's trading session will have no notable data releases, as the most notable information will come from various speakers from the Federal Reserve. First of all Fed's Lockhart will speak at 12:00 GMT. Afterwards, Kashkari will express his views at 17:00 GMT, and he will be followed shortly by Brainard at 17:15 GMT.



Gold finds support on Monday morning

Daily chart: On early Monday morning the yellow metal found support in the monthly PP at 1,326.43 and had moved slightly higher. However, the bullion is being pressured from the upside by the 20-day SMA at 1,330.82. Moreover, just above the metal are located the newly formed weekly PP at 1,333.94 and the 55-day SMA at 1,336.05. Due to being squeezed between support and resistance it is most likely that the yellow metal's price will remain flat during the rest of the day. No changes in the metal's price are also forecasted by the daily aggregate technical indicators.

Daily chart
© Dukascopy Bank SA

Hourly chart: The hourly chart for gold shows that the yellow metal began to fall at 5:00 GMT on Friday morning, when it did not manage to break the resistance put up by the 100-hour SMA. Afterwards the bullion fell without any possibility to rebound, as there were no support levels below the commodity price until the 1,327/26, where the 200-hour SMA and the monthly PP are located at. On early morning, the metal rebounded from this cluster and began a slow surge, as the 200-hour SMA pushes it upward from the downside.

Hourly chart
© Dukascopy Bank SA


Traders expect a surge

SWFX traders remain bearish, as 54% of open positions are short on Monday. In the meantime, pending commands are still largely bullish, as 68% of set up orders are to buy.

Meanwhile, OANDA Bank clients are largely bullish with respect to the bullion, precisely in 66.46%. In the meantime, SAXO bank clients are also bullish on the yellow metal, as 61.22% of positions are long.

Spreads (avg,pip) / Trading volume / Volatility


Market participants foresee the price of gold at 1,375 by November

Traders who were asked regarding their longer-term views on gold between August 12 and September 12 expect, on average, to see the metal around 1,375 by the end of October. Generally, 50% (-1%) of participants believe the price will be above 1,400 in ninety days. Alongside, 31% (-1%) of those surveyed reckon the price will trade in the range between 1,200 and 1,400 over the next three months

© Dukascopy Bank SA

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