You could have been mistaken into thinking that the down move in Gold at the back end of last week, which saw it trade to a low of 3271 on Friday and then close the week only slightly higher at 3288, was the type of price action that reflected tired long positioning and may have led to further tests of deeper support levels between 3245 (May 28th low) and 3204 (May 20th low).
However, that has not been the case, with traders rushing back to Gold as an important safe haven asset, as a rise in trade tensions between the US and China and an escalation in geo-political risks after Ukraine carried out long range drone strikes deep into Russia on Sunday, while Russia carried out attacks on Kyiv, threw the outcome of crucial peace talks between the two nations into doubt.
Yesterday, this fresh demand for Gold saw prices surge 2.8% to a high of 3383 and then continue that move up to a high of 3392 this morning in early Asia trading before some profit taking led prices back lower towards 3350 area again.
Looking forward across the rest of today, and the remainder of the week, Gold could remain in focus for several reasons, the first as traders await the outcomes of key data updates on the health of the US economy provided by the ISM Services PMI survey released tomorrow at 1500 BST, then by the Non-farm Payrolls release which comes out on Friday at 1330 BST.
The second reason may well be as traders await fresh news regarding the progress of trade negotiations between the US and China, which includes an update on whether President Trump and Xi will speak directly to each other at some stage this week. Yesterday the White House stated again that a call between the leaders of the world's two biggest economies was likely, however there has been no comment from the Chinese side so far.
The third, could be linked to how Russia and Ukraine move forward this week after peace talks concluded yesterday in Istanbul with very limited progress on a ceasefire or peace deal. Traders may well remain sensitive to news of any fresh attacks, the potential of further peace talks or comments from President Trump on the current stalemate.
Technical Outlook: Back to Potential Resistance?
It has been an impressive rally in the price of Gold since the 3120 May 15th session low, as both geo-political and trade tensions have increased again. This activity might be leading some to ask if this price strength may open a more sustainable phase of price strength, or represent a limited price recovery, before selling pressure materialises again.
Much will clearly depend on future market sentiment and news updates to help us gauge the answer to these potential questions, but does technical analysis offer clues to possible future price trends?
Potential Resistance Levels:
As impressive as latest price strength appears, traders may well now be asking, has this advance broken important resistance levels which could suggest possibilities of a push to higher levels? So far at least, it might be argued that it hasn’t yet.
From a technical perspective, evidence of selling pressure developing at a lower level each time a price recovery is seen, might be an indication that sellers are happy to be active earlier. This may be construed as a potentially negative sentiment, which may in time lead to further price declines.
So far this morning on June 3rd, at the time of writing, the latest recovery high has been 3392, which is lower than the upside extreme posted at 3435, on May 6th.
Traders may be focusing on this 3435 failure high as a resistance level and an important point that may need to be broken to suggest the pattern of lower price highs is ending.
A successful break of these 3435 highs if seen, might then suggest a more extended phase of price strength back towards the 3500 April 22nd all-time Gold high.
Potential Support Levels:
To the downside, price weakness appears to have recently been supported by 3289, which is equal to the 38.2% Fibonacci retracement of May 15th to June 3rd strength, and if the pattern of lower highs and lower price lows is to extend, it might be closing breaks under 3289 that skew risks to the downside.
Such downside breaks while not a guarantee of further price weakness, might lead to further price weakness towards 3225, which is the lower 61.8% Fibonacci retracement, and even on to 3120, which is the May 15th session price low.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
However, that has not been the case, with traders rushing back to Gold as an important safe haven asset, as a rise in trade tensions between the US and China and an escalation in geo-political risks after Ukraine carried out long range drone strikes deep into Russia on Sunday, while Russia carried out attacks on Kyiv, threw the outcome of crucial peace talks between the two nations into doubt.
Yesterday, this fresh demand for Gold saw prices surge 2.8% to a high of 3383 and then continue that move up to a high of 3392 this morning in early Asia trading before some profit taking led prices back lower towards 3350 area again.
Looking forward across the rest of today, and the remainder of the week, Gold could remain in focus for several reasons, the first as traders await the outcomes of key data updates on the health of the US economy provided by the ISM Services PMI survey released tomorrow at 1500 BST, then by the Non-farm Payrolls release which comes out on Friday at 1330 BST.
The second reason may well be as traders await fresh news regarding the progress of trade negotiations between the US and China, which includes an update on whether President Trump and Xi will speak directly to each other at some stage this week. Yesterday the White House stated again that a call between the leaders of the world's two biggest economies was likely, however there has been no comment from the Chinese side so far.
The third, could be linked to how Russia and Ukraine move forward this week after peace talks concluded yesterday in Istanbul with very limited progress on a ceasefire or peace deal. Traders may well remain sensitive to news of any fresh attacks, the potential of further peace talks or comments from President Trump on the current stalemate.
Technical Outlook: Back to Potential Resistance?
It has been an impressive rally in the price of Gold since the 3120 May 15th session low, as both geo-political and trade tensions have increased again. This activity might be leading some to ask if this price strength may open a more sustainable phase of price strength, or represent a limited price recovery, before selling pressure materialises again.
Much will clearly depend on future market sentiment and news updates to help us gauge the answer to these potential questions, but does technical analysis offer clues to possible future price trends?
Potential Resistance Levels:
As impressive as latest price strength appears, traders may well now be asking, has this advance broken important resistance levels which could suggest possibilities of a push to higher levels? So far at least, it might be argued that it hasn’t yet.
From a technical perspective, evidence of selling pressure developing at a lower level each time a price recovery is seen, might be an indication that sellers are happy to be active earlier. This may be construed as a potentially negative sentiment, which may in time lead to further price declines.
So far this morning on June 3rd, at the time of writing, the latest recovery high has been 3392, which is lower than the upside extreme posted at 3435, on May 6th.
Traders may be focusing on this 3435 failure high as a resistance level and an important point that may need to be broken to suggest the pattern of lower price highs is ending.
A successful break of these 3435 highs if seen, might then suggest a more extended phase of price strength back towards the 3500 April 22nd all-time Gold high.
Potential Support Levels:
To the downside, price weakness appears to have recently been supported by 3289, which is equal to the 38.2% Fibonacci retracement of May 15th to June 3rd strength, and if the pattern of lower highs and lower price lows is to extend, it might be closing breaks under 3289 that skew risks to the downside.
Such downside breaks while not a guarantee of further price weakness, might lead to further price weakness towards 3225, which is the lower 61.8% Fibonacci retracement, and even on to 3120, which is the May 15th session price low.
The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients.
Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.