Gold is losing ground for three days
After a relatively calm Tuesday, the bullion commenced a major bounce from three-week highs yesterday and closed the US session around the monthly pivot point (1,241.50). However, a selloff has continued this morning on the back of growing risk appetite worldwide. Now the weekly pivot is under bearish pressure, but the bulls hope the 55-day SMA (1,223.48) along with the weekly S1 (1,221.33) will be capable of limiting those negative changes. Otherwise, we would not rule out a slump towards the March low at 1,208.06.
"Definitely the boost in the dollar and strength in equities will put pressure on the gold market."
- RJO Futures (based on Bloomberg)
A continuous plunge in gold prices is provoking a closure of short positions in the SWFX market. Over Wednesday the percentage of bearish trades dipped from 66% to 63%. However, the majority is solid and only a small share of market participants, at least for now, suspects the stance should be changed from bearish to bullish.