Gold – Drifts Below $1090

Gold – Friday 31 July 2015

Throughout the last month gold has steadily declined and fallen from above the key $1200 level back to a new five year low below $1100 earlier last week. Earlier last week gold fell sharply through the $1100 level down to the multi-year low near $1070 before rallying back up towards $1100.  In the last 24 hours it has drifted lower to below $1090 whilst meeting resistance at $1100.  A couple of weeks ago it enjoyed solid support from the $1150 level which stopped the sharp falls and allowed it to rally a little higher up to above $1160. During this time it has rallied higher but run into resistance at $1160 which has sent it much lower again. To finish out a few weeks ago it was able to rally against the medium term down trend and move back above the $1170 level before easing off again. A few weeks ago it surged higher to back above the key $1180 level before easing lower again.

Should it rally back higher in the foreseeable future, then the $1200 level remains significant as it provided ample resistance to higher prices for an extended period. A couple of months ago gold fell sharply back through the key $1200 level and spent the remainder of that week consolidating in a narrow range around $1190. The $1200 level has been a significant level throughout most of this year and remains a key level presently offering reasonable resistance to higher prices, whilst lower the $1180 level continues to be significant. It will be some effort just to get back within reach of the $1200 level after its recent strong falls.

Earlier in May it was able to make a run through the $1200 level to reach a three month high above $1230 however gold was quickly sold off and returned back to the $1200 level where it enjoyed some support for several days. For around two months through April gold traded in a range between $1180 and around $1220 and had very few excursions outside these limits. Gold is currently pinned between resistance at $1200 and support at $1180 and it is surprising to see it trade in such a narrow range for several days. It seems it is waiting patiently for external factors to determine which level will be severely tested next.

(Daily chart / 4 hourly chart below)

Gold July 31 at 00:35 GMT   1088.6   H: 1098.8   L: 1082.6

Gold Technical

During the early hours of the Asian trading session on Friday, Gold is trading in a narrow range right around $1090 after recently dropping to a new multi-year low near $1070.

Further levels in both directions:

• Below:

• Above: 1100, 1200 and 1240.

OANDA’s Open Position Ratios

(Shows the ratio of long vs. short positions held for Gold among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

The long position ratio for Gold has moved back to above 65% as Gold has dropped sharply to below the $1100 level. The trader sentiment is strongly in favour of long positions.

Economic Releases

• 01:30 AU PPI (Q2)
• 01:30 AU Private Sector Credit (Jun)
• 05:00 JP Construction orders (Jun)
• 05:00 JP Housing starts (Jun)
• 09:00 EU Flash HICP (Jul)
• 09:00 EU Unemployment (Jun)
• 12:30 CA GDP (May)
• 12:30 US Employment cost index (Q2)
• 13:45 US Chicago PMI (Jul)
• 14:00 US Univ of Mich Sent. (Final) (Jul)

* All release times are GMT

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