Gold prices have been consolidating the recent drop from Feb highs, trading just above the 38.2% Fibo target of $1,275/oz. Gold is currently trading at 1286, within a range of between $1,283.74/oz and $1,290.92/oz.
Gold suffered a blow in recent weeks and the theme remains a hindrance for the bulls betting on a weaker greenback and risk-off markets. The sentiment for a trade deal between the Chinese and U.S. sparked up a flurry to sell-out of speculative position in the precious metal and a more recent bid in the U.S dollar to the 97 handle in the DXY has seen bulls capitulate through the 23.6% Fibo of last August's rally.
"Following a bout of profit taking in precious metals, the market is impatiently awaiting the release of the jobs numbers, for which the yellow metal could have an asymmetric reaction to the upside on any disappointment, considering that risk assets continue to signal technical exhaustion following the fierce rally off the lows formed in the Christmas carnage," analysts at TD Securities argued.
"While we don't expect CTA flow to add support just yet, the bar is relatively low for algorithmic trend followers to add to their length, as prices need only break above the $1305/oz range to trigger substantial upside flow — which reinforces our argument that the balance of risks is pointing asymmetrically to the upside. We remain constructive on gold prices and see new bids in the cards for the yellow metal."
Gold levels
At this juncture, daily and 4hr stochastics are still well oversold and the price has lost momentum to the downside, finding support at the daily cloud top. While below the channel support of 1,306, bears are looking for an extension to the 38.2% Fibo located at 1,275, with the confluence of the late Jan support area.
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