Gold prices consolidated for the second consecutive trading session following a two-day gain of $83 per troy ounce. The dollar moved higher generating a minor headwind for prices. US Treasuries yields moved lower following the negative data released by the US Labor Department. The market has anticipated the week data, but the shocking release of how bad it really is has helped buoy gold prices. Gold volatility reflected by the Gold VIX moved lower initially during the trading session but managed to rebound to the Wednesday closing. Volatility hit a low just below 24% and ending the session just nearly 28%.
The prices of Gold consolidated for a second consecutive session after hitting a 7-year high and is still poised to test target resistance near the September 2012 highs near 1,791. Support level of the yellow metal prices is seen near the March highs at 1,703. Additional support is provided by the 10-day moving average at 1,674. Short-term momentum has turned negative as the fast stochastic indicator generated a crossover sell signal. This happened as the indicator is printing a reading of 84, above the overbought trigger level of 80 that could foreshadow a correction. Medium-term momentum remains positive and has started to consolidate as the MACD (moving average convergence divergence) histogram is still printing in the black with a declining trajectory, which points to consolidation.
Technically, the gold bulls have the strong overall near-term technical advantage amid price uptrends in place on the daily, weekly and monthly charts. That strongly suggests the path of least resistance for prices will remain sideways to higher for at least the near term and probably longer. Bulls’ next upside price objective is to produce a close in June futures above solid resistance at $1,800.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,700.00. First resistance level is seen at $1,772.80 and then at this week’s high of $1,788.80. First support is seen at $1,750.00 and then at the overnight low of $1,738.80. Wyckoff's Market Rating that indicates the bullish/bearish ratio is at 8.5, which means the bulls are dominating the market.
Meanwhile, the recent positive move over the past two weeks or so has been along with an ascending trend-channel formation, indicating a well-established bullish trend. This set-up seems well in favor of bullish traders and support prospects for the extension of the recent strong positive momentum from YTD lows set on March 20. However, technical indicators on hourly/daily charts have moved on the verge of breaking into overbought territory and warrant some caution for aggressive bullish traders. Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for a move back towards multi-year tops around the $1748 mark.
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