Gold: reduction of prices to $1256 is expected

Hour schedule of XAUUSD

On Friday the price of yellow metal has jumped up for 1,4%, to $1295,38 for troy ounce. Gold has risen in price after the publication of the report on the American labor market which hasn't met expectation of the market. Weak data can force U.S. Fed to wait a little with further increase of interest rates.

In April in the USA in nonagricultural sector it has been created new workplaces of 160 thousand against the forecast of 195 thousand. The February indicator has been reconsidered towards reduction from 245 to 233 thousand, a March indicator – from 215 to 208 thousand. Unemployment remained at the level of 5%. The share of economically active population has decreased on 0,2, to 62,8%.

It should be noted that gold has risen in price together with US dollar. 

From the technical point of view bulls are in an advantageous position now. In medium-term prospect me increase in prices for gold to the level of $1340 (to the middle of October of the current year), in short-term – kickback to $1205 is expected (38.2% of growth from 1046,23 to 1303,62).

The report of COT – futures and options

According to the last report of COT (Commitments of Traders) which appears every Friday and includes open positions of traders till May 3 bull moods have considerably amplified.

Large speculators (Non-commercial) have increased a long position (long) by 53,5 thousand, to 356,5 thousand contracts. Short positions (Short) were reduced by 3,05 thousand, to 56,6 thousand contracts. The pure position on purchase of gold has increased by 56,6 thousand contracts to 299,9 thousand. Here It should be noted that at significant increase in long positions, the covering (Spreding column) has increased by 39,5 thousand contracts. Not all trust in a gold rise in price, are insured.

As for small speculators, at them uncertainty reigns too. They have increased both long, and short positions on gold by May 4. Open interest has grown by 113,2 thousand contracts to 816,9 thousand. Open interest has exceeded the level of the beginning of March and became maximum since July 23, 2013.

On a peyrolsa (Non-Farm Payrolls) gold has risen in price to $1295,43. As we know, traders have refused to sell dollar on Friday and Monday, than have caused fixing (closing of long positions) on gold. Following the results of day the course XAU/USD has decreased by 2,1%, to $1261,17.

Gold bargains for $1265,82. After insignificant correction to $1271 decline in the rate to $1256 is expected (38.2% of growth from 1227,32 to 1303,62). On week TF ideal kickback I see to the area $1205 (38,2% of growth with 1046,23 to 1795,80).