- Opened positions for Gold remain positive, even though advantage of longs decreased noticeably (61% bullish / 39% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,302
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,290
- Upcoming events on January 22: Italy Industrial Production (Nov) and Retail Sales (Nov), Eurozone Consumer Confidence (Jan), ECB Interest Rate Decision (Jan) and Press Conference, US Unemployment Claims (Nov 16), Australia New Home Sales (Nov), UK Public Sector Net Borrowing (Dec)
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Gold continues to climb in price as investors become more nervous and turn to safety of the precious metal amid economic and political instability in Europe, which is rooted in the tomorrow's European Central Bank monetary policy decision and the Greek election this Sunday, as well as a gloomier global economy outlook. Holdings in the SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, jumped to 742.24 tonnes on Tuesday.
Meanwhile, an improving US job market and near historically low levels of mortgage rates are likely to continue boosting demand for homes in 2015. A separate report last week showed consumer confidence advanced in January to the highest level in 11 years, raising odds more households will be looking for new homes to purchase. The University of Michigan preliminary consumer sentiment index rose this month to 98.2, the highest since January 2004.
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European statistics to drive gold on January 22, ECB decision to have less impact
Gold price in US dollars is likely to be little influenced by a possible ECB's decision on the quantitative easing tomorrow. Core fundamental news, however, is expected to act much more as main drivers for the bullion. They will include important indicators showing a change in Spanish unemployment level, Italian industrial production and retail sales, as well as Eurozone's consumer confidence. Besides that, UK Government will reveal how much funds it had to borrow in December as the number is expected to improve on a monthly basis.Read More: Fundamental Analysis
XAU/USD keeps medium-term bullish momentum
The XAU/USD cross has breached the most important resistance line, represented by the long-term downtrend at $1,218 and started to develop above this line again on January 9. At the moment it is hard to say whether Gold is able to return back below this level in the foreseeable future. If the bullion consolidates above it, then we may see metal's further increase in the medium-term, with the goal at 2011 low at $1,307. Nevertheless, the long-term outlook for the yellow metal tends to remain negative, mostly reflecting strength of US fundamental factors and gradual recovery in Europe. Therefore, in February-March Gold is still suggested to lose value, which may follow the present rebound soon.Daily chart
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As it was expected, XAU/USD's bulls managed to accumulate enough momentum in order to gain significant value during trading on Tuesday. Gold surged above the 61.8% Fibonacci retracement and has also crossed a major resistance line represented by the monthly R2 at $1,283. Moreover, on Wednesday morning an upward trend continued, while gold was pushed above $1,300 per ounce. Nevertheless, the closest supply area around $1,305 (2011 low; weekly R1) is expected to keep bulls under pressure for the next 24 hours.
Hourly chart
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Read More: Technical Analysis
Bullish majority on Gold returns above 60%
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Dec 21 and Jan 21 expect, on average, to see Gold trading around 1,270 by the end of April. At the same time, 41% of them believe the bullion will be above $1,300 in three months, while 28% of traders surveyed forecast the bullion to trade in the range between 1,100 and 1,250.
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