The precious metal has been the biggest beneficiary of China’s stimulus measures and this has finally seen it come off last week’s lows. With China and the ECB both announcing stimulus, gold might be in for a squeeze higher in the near term. Having said that, gold will be retesting the 61.8% retracement of the climb from January lows to March highs. This might present some resistance in the near term.
The pair is currently testing the 200-day moving average support on the hourly chart. This moving average has already supported the price action on a number of occasions this month and could come into play again today. Essentially we need to see the 102.30 level hold. If this fails then we might see losses extended in the near term.
The metal could extend its gains in the near after strikes in South Africa resulted in some upside in price action. Wage negotiations collapsed and this is likely to lead to a prolonged strike period. This would prompt supply concerns and ultimately squeeze prices higher.
After a long period of outperformance, it seems FLT is finally feeling the effect of the slowdown. The company announced a minor profit downgrade today and this might be used by investors as an excuse to sell in the near term.