XULF Report
Friday’s US Non-Farms revitalised risk appetite for equities and consequentially forced gold some $20 lower to hit a low of $1455.87 before bouncing back somewhat. Risk assets seem to be in a win-win situation at present as strong jobs reports deliver optimism, whilst at the other end of the spectrum, evidence of poor economic activity raises expectations of continued stimulus. Gold’s outlook is hugely influenced by the level of monetary stimulus in major economies and Fed Chairman Ben Bernanke comments last week suggested there will need to be sustained improvements in the job market before he considers removing support which is a plus for the precious metal. There are many fundamentals that can impact gold this week emanating from China, Europe, US and Australia with the G7 meeting beginning on Friday therefore be aware of the economic calendar before entering positions.
The market has lost direction since 26th April which is clearly shown by the 4 hour chart. This sideward motion may carry on this week as we continue to receive conflicting information on the strength of major economies and investor’s expectations for more or less stimulus differ. Therefore look to trade at key highs and lows during this sideway period. On the whole if the fundamentals remain the same look to pivot trade around resistance $1488 and/or support at $1447 and $1440 when backed up with corresponding candlestick information. All these levels are highlighted by the red lines. Please note that any breakthrough of these levels could lead to further moves in that direction so candlestick data and patience is very important.
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