Gold dropped like a thrown brick on the announcement that the US and China are restarting trade talks. Namely, risk off sentiment changed to risk on and the USD gained value due to the expected demand for it.
By the middle of Monday's trading the metal's price had touched the 1,382.50 level.
Bureau of Economic Analysis released the US Final GDP data, which came out in line with expectations of 3.1%.
According to the official release: "The first-quarter percent change in real GDP was the same as previously estimated, reflecting upward revisions to non-residential fixed investment, exports, state and local government spending, and residential fixed investment that were offset by downward revisions to PCE and inventory investment, and an upward revision to imports."
Economic Calendar Analysis
On Monday, the markets will look at the ISM Manufacturing PMI data at 14:00 GMT.
On Wednesday, the ISM Non-Manufacturing PMI will be published at 14:00 GMT.
For this pair the week will end with the US Employment data sets – the Average Earnings, Unemployment Rate and Non-Farm Employment Change.
XAU/USD short-term forecast
During Friday, the price for gold tumbled to the support level formed by the monthly PP at the 1,385.30 mark.
During Monday's morning, the XAU/USD rate was testing the given support. If it holds, it is expected, that gold could remain to appreciate against the US Dollar. However, note, that the rate has to surpass the 200-hour SMA at 1,397.20.
If the given resistance and support level hold, it is likely, that the exchange rate could trade sideways in the short term.
It is unlikely, that the price for gold could surpass the 1,374.77 mark due to the support level formed by the Fibonacci 23.60% retracement.
Hourly Chart
On the daily chart, it can be observed that the decision to mark historical high levels was a correct one.
Namely, one can observe that the zone surrounding the August 2013 high level provided resistance to the commodity price.
Daily Chart
Traders go short on gold
On Monday, on the Swiss Foreign Exchange 53% of open gold position volume was in short positions.
Meanwhile, in the 1000 base point range around the current metal's price the orders were long. 69% of orders were set to sell and 31% of orders were to buy.