- Opened positions for Gold are strongly positive (75% bullish / 25% bearish)
- It is possible that Gold will grow in price, with the closest resistance for it located at 1,205
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,168
- Upcoming events: BoJ Monetary Policy Statement, Japanese All Industry Activity, UK Public Sector Net Borrowing, Canadian CPI and Retail Sales
Gold rose in price yesterday as investors digested the Fed's decision to take a patient approach in deciding on a timing of policy normalization despite recent upbeat economic data. Still-elevated unemployment rate and below-target inflation provides the central bank with flexibility to take gradual approach to rates hike. An inevitable increase in US federal funds rates will dim the lure of non-interest bearing assets such as gold and also push the Greenback higher. Meanwhile, assets in the SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, were at 721.56 tonnes on Wednesday.
Concluding the FOMC's two-day meeting, Fed Chairwoman Janet Yellen said that the US central bank plans to hike interest rates next year, but it would take a patient approach in deciding on a timing of the first rate hike, which would not take place any earlier than late April. Yellen's comments along with the FOMC statement indicated that the Fed was not inclined to start normalizing its monetary stance more quickly despite recent upbeat economic data, including stronger employment growth and falling oil prices. Still-elevated unemployment rate and below-target inflation provides the central bank with flexibility to take gradual approach to lifting rates. The FOMC statement also showed that the overwhelming majority of policy makers expect the Fed to raise the federal funds rate by 0.75-1.75 percentage points in 2015.
Japanese and Canadian data to have most impact on Gold tomorrow
Even though there will be no important and influential fundamental data both from European countries and the Unites States tomorrow, other countries are likely to overtake the role of biggest newsmakers. The Bank of Japan will release its monetary policy statement, which will be followed by the all industry activity statistics and the BoJ press conference. Besides that, British Office for National Statistics will announce the amount of money the UK Government borrowed in November. The second part of the day will be marked by statistics from Canada on retail sales and consumer prices.XAU/USD returns back below down-trend
Yesterday, the XAU/USD cross traded almost completely unchanged, compared to previous two days, as Gold's price remained well-supported by the weekly S1 at $1,193 and limited by the monthly R1 at $1,205 from the upside. Daily technical indicators are still giving neutral signals, meaning that we can expect no major changes during the next 24 hours, but in the medium-term XAU/USD pair is likely to lose value.Daily chart
On Tuesday, the price of Gold was very volatile. During some points of time the bullion managed to climb even above the weekly pivot point, which is located at $1,215. However, fundamental factors pushed it back to trade lower, which resulted in the closure just above the weekly S1 at $1,197. As daily technical studies support the sideways movement, we would suggest Gold to hover around $1,200 in the nearest future.
Hourly chart
Long opened positions return back to 75%
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Nov 18 and Dec 18 expect, on average, to see Gold trading just below 1,200 by the mid-March. At the same time, 49% of them believe the bullion will be above this mark in three months, while one third of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.