Gold has staged a goodish recovery bounce from 2018 lows. Will the uptick be utilized as an opportunity to initiate some fresh short-positions? Gain insight on this from this 16 May Gold Price Technical Forecast.
16 May, OctaFX – Gold prices edged higher through the early European session on Wednesday and has now recovered a part of previous session slump to fresh 2018 lows.
A subdued USD demand/retracing US bond yields helps ease the bearish pressure
On Tuesday, a stronger US Dollar, supported by surging US bond yields prompted some aggressive selling around dollar-denominated commodities – like gold. Adding to this, reviving hopes that the Fed might opt to raise interest rates faster than priced in the market aggravated the bearish pressure and dragged the non-yielding yellow metal below the $1300 mark to its lowest level since December 28.
The selling pressure now seems to have abated, at least for the time being, with a modest retracement in the US Treasury bond yields and subdued USD price-action helping the commodity to stage a minor recovery from near-term oversold conditions.
It would now be interesting to see if the metal is able to build on the momentum or the uptick is utilized as an opportunity to initiate some fresh short-positions, especially after yesterday’s bearish breakdown below the very important 200-day SMA.
Moving ahead, today’s US economic docket, featuring the release of housing market data, along with a scheduled speech by Atlanta Fed President Raphael Bostic would now be looked upon for some fresh impetus later during the early NA session.
16 May Gold Price Technical Forecast
Currently trading around $1296 level, immediate resistance is now pegged near the $1300 handle, above which a fresh bout of short-covering could lift the commodity back towards testing 200-DMA support break-point near the $1307 region.
On the flip side, $1290 level now seems to have emerged as an immediate support, which if broken now seems to open room for a continuation of the commodity’s bearish trajectory further towards testing its next support near the $1278 area.
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