Gold: bulls have failed to grasp control

Gold

Another session where the bulls have failed to grasp control played out under the resistance of overhead supply at $1480 leaves the gold rally looking questionable. Having tracked gradually higher in the past week and a half, posting two negative sessions has taken any (albeit rather light) wind out of the sails of recovery. The resistance in the $1474/$1480 band seems to be building as in five of the past six sessions we have seen forays into this band unable to hold the move. The key is whether this period of consolidation is the source of the next leg lower. On a technical basis, we have already seen the basis of an unwinding move having played out, where RSI has fallen over around 45, whilst Stochastics are also falling over again. Although the market has ticked mildly higher again today, how the bulls react will be telling. Another failed intraday rally would again point to the likely retest of $1456 and $1445 in due course. We retain our corrective outlook on gold and selling into strength (predicated on what is still a likely positive outcome from the phase one trade negotiations between US and China).