Bears Are Still Pressuring Gold
There has been a downward trend on the Gold charts for the last three weeks. Futures for #GC have decreased by more than 4.5%.
Source: finviz.com
Here are the reasons that pressure the “golden” dynamics:
1) The gold production in the USA is growing. Mining plants have increased their production to 36.3 tons (9%) in January-February, according to the U.S. Geological Survey.
2) The global demand for the “yellow metal” is declining. The latest World Gold Council report says that the demand has fallen by 18% in the first quarter of this year compared to the same quarter of 2016.
3) Different technical factors. Gold has grown to the 1295.00 USD mark in the middle of April. This mark is a very strong resistance level.
A quite positive statistics was published by the US Department of Labor last Friday. At first, in April, the number of employed in the non-agricultural sector has grown to 211,000 that is by 14% more than it was expected. Next, the unemployment rate has fallen to 4.4% while the average hourly wage has increased to 0.3%. As a result, this economic report may cause a strong growth in the demand for USD. And the dollar strengthening usually pressures the price for gold.
A current technical pattern
Support levels: 1225.00 USD, 1210.00 USD, 1195.00 USD
Resistance levels: 1245.00 USD, 1270.00 USD, 1295.00 USD
A classic pattern of the Price Action method, Bearish Engulfing, was formed on the H4 chart. This formation indicates the current trend continuation. The closest support is 1225.00 USD. The indicators signals are different at the moment. Nevertheless, we recommend looking for the entry points into short positions, if the price fixes below the 1225.00 USD support level. Confirmations can be found on smaller timeframes. The goal for taking profit is 1210.00 USD. The quotes of the “yellow metal” may reach the 1195.00 USD mark in the medium term.
Disclosure: None.