- There are relatively less bulls than yesterday - 72%
- The closest resistance is the weekly PP and 55-day SMA at 1,191.22/1,187.72
- Meanwhile, the closest support is considered to be 1,180.00
- Upcoming events: US Non-Farm Payrolls, Average Hourly Earnings, Unemployment Rate (Apr), Canada Net Change in Employment, Unemployment Rate (Apr)
© Bloomberg
Gold declined for a third consecutive trading session as global equities and the US Dollar rebounded following steep losses. Even though the number of Americans applying for unemployment benefits rose slightly in the week ended May 2 after falling to the lowest level in 15 years, the level remains consistent with improving labour market.
Phil Carr, director and head of commodity trading at The Gold and Silver Club, says that he would not be a buyer of precious metals at the moment, but will wait for July. The reason is seasonality of demand. According to the analyst, "from July and August onwards is where we often get a lot of buying and a lot more strength in the precious metals."
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Focus shifts to the US Non-Farm Payrolls
Investors' attention now turns to the non-farm payroll report later today to assess the strength of the world's number one economy and estimate a timing of the first interest rate hike by the Fed since 2006. The report is expected to show the US employers added 228,000 jobs last month, compared with 126,000 in March. Consequently, the US unemployment rate is predicted to slide to 5.4%, down from 5.5%. If the labour market reports surprise to the downside, the bullion is likely to receive a substantial support.
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XAU/USD to attack 1,180
Since the second quarter of 2013, the bullion has been developing inside the falling wedge pattern, meaning that trading range is decreasing as time goes on. In March 2014, however, the yellow metal resumed gaining value, even without touching the lower trend-line, at that time located around 1,150. Towards the end of June gains are likely to be limited and the bullion should be driven by the 200-day SMA around 1,220 with a slight bearish bias. Eventually, bears are forecasted to overtake a lead and drive the metal back to the south. The overall negative trend for Gold seems to be the case in the long-term future, while at the end of this year the precious metal is likely to consolidate around 1,150, if the present trend persists.Daily chart
© Dukascopy Bank SA
At it turned out, the demand area at 1,188 was unable to underpin the price, and the bears pushed through a combination of the weekly pivot point and 55-day SMA. Accordingly, the focus is now on 1,180, which has been acting as a reliable support level since the beginning of April. However, the technical indicators are mostly bearish, and we should not rule out a deeper decline. The additional significant support level is at 1,165, the current location of the monthly S1.
Hourly chart
© Dukascopy Bank SA
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Sentiment stays strongly bullish
At the same time, OANDA traders became even more bullish towards the gold. The portion of long positions added two percentage points, and now they constitute 71% of the market. As for the SAXO Bank traders, they decreased their long exposure to the precious metal. The share of bulls declined from 62 to 59%.
Spreads (avg,pip) / Trading volume / Volatility
Gold to trade at 1,200 by the end of August
Traders, who were asked regarding their longer-term views on XAU/USD between Apr 7 and May 7 expect, on average, to see Gold trading around 1,200 by the end of August. At the same time, 55% of them still believe the bullion will be above this mark in three months, while 26% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200. © Dukascopy Bank SA