XULF Report
Gold is holding its ground despite broad scale equity rallies that have pushed the Japanese Nikkei to a 5 year high as the Reserve Bank of Australia’s rate cut adds to the recent central bank and jobs news that is having lingering effects on the markets. There is a feeling that gold’s retracement has run out of steam and an impending reversal is on the cards.
The daily chart shows a couple of recent small bodied and long shadowed candlesticks which illustrates the indecision in the market at present and that some news from a fundamental angle is required to push gold higher than the high of $1487.90 made on the 3rd May. An absence of economic forces in favour of gold will likely cause a drift downwards.
The market is rather docile at the moment making it difficult to use indicators to predict the next move but nonetheless candlestick data and the loss of momentum signals this bounce has topped and a decline of some degree is due soon to break below the standout low of $1440.30 made on the 1st May. Place a stop loss just above yesterday’s high around $1479 and target a $40 profit by the end of the week giving you an approximate risk to reward ratio of 1 to 2.
Be aware of Chinese inflation and trade balance data due out Wednesday and Thursday which are the potentially biggest numbers this week.
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