- SWFX traders have become bearish with 52% of open positions being short
- 56% of pending commands are to buy the bullion
- The metal's price opened the day's trading at 1,295.53
- Upcoming Events: US Crude Oil Inventories
The yellow metal started the day above all the resistance levels, which it faced on Tuesday. However, a retreat began instead of a jump. By looking into various timeframe charts it can be discovered that the commodity price might have exhausted its strength near the 1,295 mark. As a result a period of consolidation has begun, which is following the three consecutive trading session surge of more than 2%.
Business activity in the US non-manufacturing sector fell last month but remained in the expansion territory for the 89th straight month. The Institute for Supply Management reported on Monday that its PMI for the US services sector dropped to 56.9 in May from the prior month's 57.5, whereas analysts anticipated a slighter decrease to 57.1 points during the reported month. The ISM said that 17 non-manufacturing industries reported growth last month.
US Crude Oil Inventories
The daily chart shows that not only the weekly and monthly pivot points are being ignored, but also the long term trend lines are not influencing the currency exchange rate by direct touch. However, the long term ascending channel pattern's upper trend line near the 1.13 mark might provide enough resistance to keep the rate from reaching the 1.14 mark for more than a month. In accordance with the pattern a medium term decline of the currency pair to as low as 1.09 could occur in the upcoming two months.
Gold near levels of significance
On Wednesday morning the yellow metal was in a decline down to the 1,290 mark. The reason for that from a technical perspective could be explained by the fact that the commodity price had overextended its gains. Such a fact is hinted by the fact that the only notable resistance, which the metal faced, when it changed its direction, was the upper Bollinger band of the hourly chart. Most likely this is the beginning of a short consolidation, as the metal had been trading in limbo between the various support levels that were providing resistance on Tuesday. Due to these reasons combined the previous target of the weekly R3 near the 1,307 mark remains intact. However, market participants should watch closely, where the rebound occurs.
Hourly Chart
The daily chart reveals additional information, as it can be seen that the pair reached over the resistance of the upper Bollinger band of the daily chart. That is a clear sign of confirmation of the theory that the bullion overextended its gains in the previous trading sessions. Moreover, it can be observed that the mentioned Bollinger band has begun to provide what might turn out to be the most hindering resistance to the metal's price in the next few trading sessions.
Daily Chart
Bulls no longer dominate
SWFX traders have become neutral bearish in regard to the bullion, as 52% of trader open positions are short. However, 56% of trader set up orders are to buy the metal.
OANDA Gold traders have become almost neutral, as open positions are 51.75% long on Wednesday, compared to 56.46% previously. Meanwhile, traders of SAXO bank are clearly on the bearish side, as 56.54% of open positions are short, compared to only 54.29% on Tuesday.
Spreads (avg, pip) / Trading volume / Volatility
Market participants foresee the price of gold being near 1,350 in September
Traders who were asked regarding their longer-term views on gold between May 7 and June 7 expect, on average, to see the metal just below 1,350 in September. Generally, 44% (-1%) 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, 28% of respondents believe that the price will be below the mentioned mark.