Gold hits 55-day SMA, eyes rebound from here
The bullion posted another ultra-negative session on Thursday, by slumping as low as 1,229 by the end of US trading. Yesterday it eroded the weekly pivot point and the 20-day SMA resting around 1,232/35, thereby refocusing our attention to the formidable demand is face of the 55-day SMA at 1,225. We estimate no immediate failure of the bulls in recovering from here, meaning some bullishness is possible today. It is also indicated by strongly long weekly technical indicators. However, any descent below the moving average is going to affirm that gold maintains a clear medium-term selling mode.
"The rally earlier this week was tied to the strength of Japanese yen and risk aversion. But that has retreated now."
- a Hong Kong-based gold trader (based on CNBC)
A continuous plunge in gold prices is provoking a closure of short positions in the SWFX market. Over Thursday the percentage of bearish trades dipped from 63% to 61%.