In a recent post on gold I detailed how the precious metal had finally managed to find a degree of bullish momentum, but sadly this has come to a shuddering halt with today’s price action not only taking gold down to test the key $1300 per ounce level but also resulting in the metal breaking away from the congestion region that has been in place since the beginning of this year.
One reason for the present move lower is, of course, a stronger USD which has been moving steadily higher ahead of tomorrow’s FOMC where market consensus, as expressed via the CME Fed Watch Tool, is for a hold of interest rates. This expected hold will be despite the PCE index coming in on target at 2%. The PCE is the FED’s preferred metric for inflation, and it will be interesting to see how this data will be covered in the accompanying statement, and the extent to which it will influence the FED’s interest rate path for the remainder of the year. Gold traders and investors will be particularly keen to gauge the FED’s thoughts and intentions in this regard given gold’s classic role as a hedge against inflation.
Meantime the technical picture for gold, at time of writing, is clear as the price action has found some solid support at $1300 per ounce for a number of reasons. First this level is one that almost always attracts buyers. Second the volume on today’s down candle can only be described as mediocre, suggesting the move lower is anomalous although we do have to take into consideration today’s May day holiday. However, the 8 hour chart which covers the US session is encouraging as we have a candle with a deep wick forming on good volume confirming some strong buying late in the session. And finally on the daily chart the area immediately below the $1300 price point also reveals further deep areas of support which would certainly help to cushion and slow any further falls. To the upside the key level for gold is a hold above $1312 and thereafter $1315 is a price level that would provide a solid platform of support in any move higher.
By Anna Coulling
Anna its rigged to hell, more than bonds and stocks, forex, silver is also rigged, naked shorts they call it.
My old mate Rothschild will be sitting down at 11 am with all the bankrupted banks fixing the precious metals prices, just great aint it.