Gold Dips After the Spike Failed at the 100 SMA

Gold surged higher at the start of this week after tensions in the Middle East escalated once again, breaking the previous record high at $2,075 and establishing a new high at $2,144-45. But made a strong bearish reversal the next day and the situation is looking increasingly favorable for sellers. Today we saw a spike after the US employment claims, but that faded and another reversal followed, showing that sellers remain in control and are using retraces higher to get a better entry point.

We had a sell Gold signal which we opened yesterday. Although Gold formed a support zone above the $2,020 zone and crawled higher. the unemployment claims gave the USD a small kick higher, which pushed XAU/USD close to $2,040. However, the 200 SMA (green) came into play on the H1 chart, providing resistance and GOLD reversed lower again. We decided to open another sell Gold signal during the reversal.

Unemployment claims today came in line with expectations, coming in at $220K against 222K expected, which was taken as a positive sign after two soft jobs reports this week. Following the unexpected surge in continuing claims last week, the figure has fallen back below 1.900M, helping to push bond rates higher, with the 10-year treasury yields now up by around 6 basis points to 4.185%. There has been some speculation that strike workers returning to work are contributing to the rotation back to the downside for the ongoing claims.

Nonetheless, the USD is higher now after the report and Gold has dipped back lower. Market sentiment seems mixed, with US stock markets continuing to remain bullish while risk currencies were declining. Although they are making some gains as well today, with commodity dollars up around 40pips off the lows. This makes the Gold prediction a bit more complex, but overall the sentiment for Gold remains negative, so we’re short again here.

Gold Live Chart