Gold Price Eye Multi-Year Resistance Into June Open- ECB, RBA On Tap -

Gold Price Eye Multi-Year Resistance Into June Open- ECB, RBA On Tap

Jun 04, 2017Jeremy ParkinsonFinance0

Fundamental Forecast for Gold:Neutral

Gold testing key multi-year trendline resistance

Gold prices rallied for a third consecutive week with the precious metal up more than 0.8% to trade at 1276 ahead of the New York close on Friday. The advance comes alongside continued strength in broader risk assets with all three major U.S. indices looking to close at fresh record highs. Bullion prices are now back at key structural resistance levels and heading into the start of June trade, this seemingly symbiotic relationship with risk

U.S. Non-Farm Payrolls disappointed on Friday with a lackluster print of just 138K as the Labor Force Participation rate fell to 62.7%, its lowest clip since December. Still, even with downward revisions to last month’s strong report, the expectations for a Fed rate-hike this month remain well anchored with Fed Fund Futures pricing a greater than 80% probability. Looking ahead to next week, traders will be eagerly awaiting central bank rate decisions from the Reserve Bank of Australia (RBA) & the European Central Bank (ECB). For gold prices however, the focus is on a key technical resistance slope extending off the all-time record highs – a level that is now in focus heading into June trade.

A summary of IG Client Sentimentshows traders are net-long Gold – the ratio stands at +2.28 (69.5% of traders are long)- bearishreading

The ratio is now at its lowest levels since April 23th

Long positions are 10.0% lower than yesterday and 10.0% lower from last week

Short positions are 15.2% higher than yesterday and a full 20.8% higher from last week

Despite the fact that sentiment continues to point lower, the marked increase in short exposure highlights the breakout potential here- especially as prices approach key near-term structural resistance. That said, we’ll be on the lookout for near-term exhaustion up here with the immediate long-bias at risk heading into June trade.