XAUUSD, Daily               

The Gold price has been under significant pressure since US Election day (where it touched $1334 intra-day) and has just closed its worst month in over three years, having declined 8% in November. Earlier today it tested and then broke the key psychological and technical $1170 level.  Should this break be maintained then I would be looking for SHORT positions with an initial Target 1 at $1144 and Target 2 $1120.

The $1170 level represents the 61.8 Fibonacci retracement level from the 2016 high in June at $1375 and a 10 month low for the Gold price. The USD strength during November has added to the decline in the price, together with the tightening of capital flows out of China.  Today the London FT reported that China (a major buyer of gold it all its forms) is tightening gold import quotas to prevent USD outflows from the country.  Chinese banks will be required to use USD quotas when buying gold.

The RSI and MACD suggest the price is already oversold, however the widening Bollinger bands remain pointing down, the Parabolic SAR, and On Balance Volume suggest further downside potential.

Janne Muta

Chief Market Analyst

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Gold, 60 min

Yesterday in her prepared testimony before the Senate Banking Committee the Fed Chair Yellen repeated her view that the Fed will continue raising rates cautiously. She said that she’s optimistic on further growth although she noted there are still considerable uncertainties over the outlook. The Fed is monitoring the job market carefully to see whether the weakness in the May report was transitory, she said, and added it is important not to react to one or two reports. On the positive front, Yellen said spending has picked up smartly while housing is recovering but cautioned that the Fed can’t dismiss the slow productivity growth.

Her comments didn’t have significant impact on gold futures. Rather it seems that the price of gold has been following the improved sentiment on Brexit. In the longer term, Fed decisiveness on sticking to the rate hikes could be a risk to gold bulls. The result will obviously depend on other factors as well. While rate hikes should create selling pressure for gold they could turn the stock market lower as well. In addition to safe haven buying amongst the ordinary investors this would increase money managers’ need for diversification in their portfolios. Historically gold and stock markets have had an inverse correlation and in the times of stock markets experiencing trouble reallocating assets from stocks to gold can help to diminish volatility in the portfolios.

This week however everything is about the Brexit vote. There could be a rally before the result is clear and published but should the remain campaign win, like we do believe it will, this rally should be an opportunity to sell at higher prices.

Since our Live Analysis Webinar a week ago gold tried to rally beyond the high of $1306 but failed to attract sufficient demand to stay above the level. This led to the market correcting considerably. Gold broke below the 1280 support in yesterday’s trading thus creating a resistance at the level. Since then it has remained in a relatively tight 60 min channel that is sloping downward. There is some minor intraday support at 1264 – 1267 while the downward sloping channel is top is currently at 1270. I expect the very near term movements to be defined by these technical factors while the more significant S&R levels can be found in the daily picture at 1251 and 1280. In the daily picture gold is currently getting oversold as per Stochastics Oscillator (7.3.3)

The current price action in smaller timeframe charts support the view that gold will move higher from the 1267 support. If price breaks above 1270 momentum could carry on and could bring it up to the 1280 resistance. I’m therefore looking for short entry signals between 1276.50 and 1283 with Target 1 at 1271 – 1273 and Target 2 at 1259 – 1262.

The above analysis is relevant if gold moves to the Sell Area relatively quickly and reacts to it promptly well before the referendum results are published. If price happens to be at or inside the area when the results are published the liquidity could be low thus increasing the risk of unruly market moves. As per usual I am advising that  all clients refrain from geared positions at the time of major news publication.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Gold, Daily

Gold prices have come off (-0.88%) as money has flowed into equities and markets are in a risk on mode. German Dax is up by 1.49% together with Eurostoxx 50 rising by 1.5%. Elsewhere, Indian CNX Nifty index is up by over 1.7% at the time of writing. The price of gold created a bearish doji candle in the weekly chart last week. In the daily time frame price has created a lower high. Both of these technical factors suggest weakness in the price of gold and increase chances of price moving lower in the coming days. Also, Stochastic oscillator (daily) is pointing lower.

There was a minor support at 1270 – 1272 that gold has now broken. We could see gold move all the way down to between 0.5 and 0.618 Fibonacci retracement levels where the 30 and 50 period moving averages currently reside. Should gold move to these levels, it’d be near the rising channel low and fairly oversold. I am therefore looking for long entry signals inside my buy area at 1243.80 – 1255.50 range with Target 1 at 1265.50 – 1276 and Target 2 at 1281.80 – 1291.40.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

Gold, 240 min

Weak dollar has raised the demand for the physical gold while the futures markets have been cautious ahead of the Federal Reserve policy FOMC statement on Wednesday. This has kept the gold bulls in check and the rally above $1270 on Thursday was quickly turned into a pretty sizeable and fast drop to the current levels where the price of gold has attracted some buying today. Now that ECB’s Mario Draghi didn’t bring new strong QE measures to the table in the last week’s meeting the Fed Chair Yellen has less pressure to refrain from raising the US rates. This should increase the probabilities of a US rate hike and therefore keep the lid on gold. However, Fed’s still not likely to hike rates before the latter part of year and even then only gradually. This could mean serious selling pressure on gold still waits a little longer. Also, the uncertainty related to negative rates, a new financial experiment should create some support for gold.

Technically the price of gold has been moving sideways between a $1202 – $1206 support area and a resistance at $1288. In the monthly chart gold has created two pin bars that signal supply and demand having been in a relative balance in March and April. Such indecisiveness  usually means that the price is turning lower after a move higher but now price didn’t drop after the first bearish pin bar which suggest that there is some support for on gold as well. In other words this market is undecided and could range more before settling to a directional trade. The very recent price action however seems to me short term bearish with Thursday’s candle forming a shooting star and price following lower on Friday. This indicates that traders are likely to sell rallies into resistances.

I’m therefore looking for sell signals in gold at or inside my sell area near 38.2% and 50% Fibonacci levels between $1244 and $1254 with Target 1 at: $1227 – $1238 and Target 2 at: $1190 – 1204.70. Using strict risk management is recommendable as usual. If you don’t know what to look for as trade signals or how to manage your trading risks professionally you are welcome join to my free webinars to learn more.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.