At the closing session of COMEX trades on Monday August gold futures fell by 0.1% up to $1188.70 per ounce. Due to expectations of the interest rate increase in the USA interest in gold is decreasing, while bonds and shares now represent assets, generating higher income. Ambiguous US economic news prevents further decline in gold. Although business activity index ISM was positive (in May the index amounted to 52.8 against the forecast of 51.8 and the previous index of 51.5), as well as index of construction costs (In April the index was 2.2% versus the forecast of 0.8% and the previous level of -0.6%); however, private consumption expenditure (PCE) has grown only by 0.1% this April compared to the same index last April, demonstrating the lowest growth rate since October 2009. Inflation is also below the target level of 2%.
At the prospect of publication of the Non-farm Payrolls (05 June 15:30 GMT+3) gold is likely to continue to trade in the narrow range, tending to decline.
Support and resistance
Since the beginning of the year the pair XAU/USD has dropped from 1300.00 to 1150.00 and is currently trading in the range of 1225.00–1175.00. Today, the pair XAU/USD is moving in the channel of 1186.00-1190.00. Fibonacci 23.6% (1185.25) represents strong resistance level, which prevents further decline in the pair. If this level is broken down, the pair will be able to go to the lows of this year at Fibonacci 0% (1149.50).
On the daily chart OsMA histogram is below the zero line and is going down. Stochastic does not leave the sell zone. On the 4-hour chart OsMA is declining being near the zero line. Stochastic is in the sell zone.
Support levels: 1185.25, 1181.25, 1172.00 and 1166.00.
Resistance levels: 1197.50, 1207.50, 1212.25, 1219.50 and 1225.60.
It is recommended to open short positions from the levels of 1207.50, 1197.50 and 1185.25 with the targets of 1181.25, 1171.85, 1165.10 and 1149.50. Alternative scenario is possible if the price breaks down the level of 1198.00. In this cease the pair will go to 1207.50 (Fibonacci 38.2%).