The bullion continues lower on Friday. However, it seems that the fall of yellow metal seems to have paused. The reason for the pause is most likely the expectation of various fundamental events. The most important event will be the French Presidential Election, the results of which will either cause a run to safety or a risk on sentiment.
The number of Americans filling for unemployment benefits dropped markedly last week, pointing to the tightening labour market. The Department of Labour reported on Thursday that initial jobless claims fell to 238K in the week ending May 28, the lowest in 17 years, following the preceding week's 257K and topping expectations for a slight decrease to 246K. That marked the 113th week of claims remaining below the 300K level, the longest stretch since 1973.
Upcoming events: US data and Yellen's speech
Gold reaches 1,230 mark
On Friday morning the yellow metal was in a period of consolidation, which was expected after the losses, which were suffered during the two previous trading sessions. On Thursday the bullion almost touched the 1,225 mark before it suddenly rebounded. The previous forecast of the metal reaching for the combined support of the 100-day SMA at 1,223.79, 38.20% Fibonacci retracement level at 1,219.20 and the monthly S2 at 1,218.01 remains in force. The main fundamental reason for that would be the fact that during the weekend the French election final results will come in, and with it uncertainty will be gone.
Daily chart
Hourly chart
Bulls show dominance
SWFX traders remain neutral bearish on the metal, as 52% of open positions are short. However, 64% of trader set up orders are to buy the metal, which is lower by 9%, compared to Thursday.
OANDA Gold traders have increased their bullish position amount, as open positions are 66.85% long on Friday, compared to 64.63% previously. Meanwhile, traders of SAXO bank have done the opposite, as 65.15% of open positions are long, compared to 72.94% positions on Thursday.
Spreads (avg, pip) / Trading volume / Volatility
Market participants foresee the price of gold being below 1,350 in early August
Traders who were asked regarding their longer-term views on gold between April 5 and May 5 expect, on average, to see the metal near 1,350 in early August. Generally, 47% (+3%) of participants believe the price will be above 1,350 in ninety days. Alongside, 41% (-2%) of those surveyed reckon the metal will trade in the range between 1,200 and 1,350 over the next three months.