Monday May 23, 2016 10:26

(Kitco News) - A spate of hawkish comments from Federal Reserve officials pressured gold prices lower in early trading. In the short-term, gold bears remain in control of the trading action.

On the speaking circuit Monday, Federal Reserve Bank of San Francisco President John Williams said he sees the central bank raising interest rates two to three times this year. Also, Federal Reserve Bank of St. Louis President James Bullard said Monday there were more factors in favor of a gradual pace of rate hikes than there are for holding policy steady.

Gold bears gained fresh momentum from these comments as the market remains fixated on the timing of the next U.S. interest rate hike. Gold traders will also be monitoring Fed Chair Janet Yellen's comments on Friday.

What's Your Timeframe?

One of the key tenets of successful trading includes knowing and trading your timeframe. If you are a longer-term trader, current market action is just noise.

Quick Chart Read

In the short-term, gold bears are in control. Here's why:

Gold recently failed on an attempted breakout from a daily triangle

Comex June gold futures are trading below their 20-day moving average

Daily momentum is weak and pointing lower

Intraday Traders

Drilling down to an intraday picture, the 60-minute chart shows a potential (not confirmed) bullish momentum divergence. Minor support is seen at the $1,243.50 level. If that holds the bullish momentum divergence could support a stabilization in gold.      

But, if $1,243.50 gives way, the bears see a number of minor bearish targets and support points at $1,239.10, $1,228.50, $1,225.40 and then major support at $1,210.30-$1,207.70.

Key Trading Levels – Selling Rallies 

On the upside, initial resistance lies at $1,262.30 and then the 20-day moving average at $1,270.40. The bulls would need to reclaim those resistance ceilings in order to improve the short-term trend bias.

Trading Tip: As long as those resistance levels hold firm, short-term traders will be selling rallies.

Big Picture

Gold has retreated back into its "holding pattern" between roughly $1,288 and $1,208 –or the zone that confined the market from late February to late April. Gold bulls attempted to rally out of that range poking to a high at $1306 on May 2, but momentum wasn't on the bull's side.

Gold is now back in the range. Expect choppy trading. The market is not in a strongly trending environment within this range. Use caution with trending systems or trading approaches, this is a quick-hit, intraday and scalpers market right now.

By Kira Brecht, contributing to Kitco News;