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"We remain longer term relatively positive but believe we are entering a corrective phase that may take prices closer to the $1,220 level near term."
- HSBC (based on CNBC)
Pair's Outlook
While provided with massive downside momentum around the weekly pivot point and monthly R1 at 1,286/87, the bullion was sold-off at the steepest pace since late-March. The spot closed below the weekly S1 (1,269.33) and the April 29 low, thereby shifting expectations further down. In case the 20-day SMA fails to cap an initial decline at 1,261.57, then the only reliable support will be found between 1,251.62 and 1,246.32. There gold is supposed to encounter the weekly S1, monthly pivot point and 55-day SMA. In the meantime, the longs are hoping to recover at least the minimal loss beyond the weekly S1.
Traders' Sentiment
Following a sharp drop in gold prices yesterday, even more market participants of the SWFX market decided to accept the bearish stance. At the moment the number of short positions exceeds 73%, the highest level in more than ten weeks.
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