Gold falls below significant support

Source: Dukascopy Bank SA
  • SWFX traders remain bearish with 54% of open positions being short
  • 52% of pending commands are to buy the bullion
  • The metal's price opened the day's trading at 1,267.86
  • Upcoming Events: US PPI

The yellow metal has passed the support of the medium term pattern, which held the course higher. Various clues indicate that by the end of Monday's trading session the commodity price will decline, as on the hourly chart the closest support is located at the 1,255 mark. However, the daily chart reveals interesting additional information.

The number of Americans filing for unemployment aid dropped less than expected in the week ended June 2. The Labour Department reported on Thursday that initial jobless claims fell 10K to 245K last week, following the preceding week's upwardly revised figure of 255K. Meanwhile, market analysts anticipated a bigger decrease to 241K during the reported week. Nevertheless, claims remained below the 300K level for the 118th consecutive week, the longest streak since 1973.

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One US data release on Tuesday



Until the middle of Tuesday's trading session there are no notable macroeconomic data releases scheduled, which might affect the price of the yellow metal. Due to that reason there is an opportunity to take a look at the more distant future. After doing that one can notice that the next notable data release for gold will be the publication of the US PPI and Core PPI data sets on Tuesday at 12:30 GMT. That data release is scheduled to be also covered by the Dukascopy research team on the bank's live webinar platform.



Gold falls below medium term support

The medium term channel did not manage to hold its ground, as the short term descending channel managed to pass through the support of the medium scale pattern. Due to that reason it can be expected that the decline of the yellow metal will continue in accordance with the short term channel on Monday. That would occur in the case if there are no fundamental events, which cause a run to safety or a depreciation of the US Dollar. In the case of a decline the next target for the bullion is the weekly S1, which is located at the 1,255.79 level. However, on the daily chart there are some additional support levels, which should be taken into account. On the other hand, if the metal rebounds, it might reach for the closest resistance level at the 1,276.85 level.

Hourly Chart

As mentioned before, the daily chart has additional information regarding the pair. The decline of the bullion is not occurring due to the fact that the 20-day SMA is providing support at the 1,266.53 level. In addition, if the 20-day SMA is passed, the 55-day SMA is ready to provide support at the 1,260 mark. In May the 55-day SMA proved itself to be strong enough to force the metal into additional gains.

Daily Chart



SWFX bears dominate

SWFX trader sentiment has not changed even slightly since Friday. Traders are clearly bearish, as 54% of open positions are short on Monday. Meanwhile, 52% of trader set up orders are to buy the metal.

OANDA Gold traders remain bullish, as open positions are 56.75% long on Monday, compared to 55.64% previously. Meanwhile, traders of SAXO bank are no longer bearish and have joined the bulls, as 54.69% of open positions are long, compared to 53.62% bearish positions on Friday.


Spreads (avg, pip) / Trading volume / Volatility

Market participants foresee the price of gold being near 1,350 in September

© Dukascopy Bank SA

Traders who were asked regarding their longer-term views on gold between May 12 and June 12 expect, on average, to see the metal just below 1,350 in September. Generally, 39% (-4%) of participants believe the price will be above 1,350 in ninety days. Meanwhile, there are those, who expect the price to be below 1,300. Namely, 32% (-2%) of respondents believe that the price will be below the mentioned mark.

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