Gold Tumbles As US Posts Positive Data

Gold prices flirted with the $1300 mark on Monday, but the precious metal has taken a tumble since then, dropping to the lowest levels seen since early February. Late in the European session, the spot price stands at $1265.91 per ounce. There was good news out of the US on Tuesday, as consumer confidence and housing data beat estimates. There are no US releases on Wednesday.

The US consumer continues to be optimistic, which is good news for the US recovery. On Tuesday, CB Consumer Confidence continued to look strong as the key indicator improved to 83.0 points in April, which was within  expectations. This was the third straight reading above the 80-point level. Meanwhile, the Standard & Poor’s/Case-Shiller house price index posted a strong gain of 12.4%, surpassing the estimate of 11.9%. The markets are keeping a close eye on Thursday’s events, with the release of Preliminary GDP and the all-important Unemployment Claims.

The week did not start well for the EU, as anti-EU parties posted stunning victories in European parliamentary elections held on Sunday. These “eurosceptic” parties posted strong gains across the continent, notably in France, the UK and Greece. With Eurozone countries suffering from weak growth and high unemployment, voters had a chance to lash back in the elections, and their frustration and anger was heard loud and clear at the ballot box. French Prime Minister Manuel Valls called the results an “earthquake” and the elections could weigh on the euro, although so far the currency has remained firm.

 

XAU/USD for Wednesday, May 28, 2014

Forex Rate Graph 21/1/13

XAU/USD May 28 at 11:05 GMT

XAU/USD 1265.79 H: 1266.66 L: 1265.79

 

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1230 1252 1260 1275 1280 1300

 

  • Gold has lost ground on Wednesday.
  • 1260 is providing weak support as gold has slipped. Next there is support at 1252.
  • 1275is a strong resistance line.
  • Current range: 1260 to 1275.

Further levels in both directions:

  • Below:  1260, 1252, 1230 and 1200
  • Above: 1275, 1280, 1300, 1315

 

OANDA’s Open Positions Ratio

XAU/USD ratio continues to point to gains in long positions in Wednesday trade. As gold has dropped sharply, open short positions have been covered, resulting in a larger percentage of open long positions. The ratio has a substantial majority of long positions, reflecting a strong trader bias towards gold turning around and gaining ground against the US dollar.

Gold has recorded sharp losses on Wednesday. XAU/USD is steady in the European session.

 

XAU/USD Fundamentals

* There are no US releases on Tuesday.

*Key releases are highlighted in bold

*All release times are GMT

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.