- Opened positions for Gold remain positive with a confident majority of bullish trades (61% bullish / 39% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,290
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,283
- Upcoming events on January 23: France Manufacturing and Services PMI (Jan), Germany Manufacturing and Services (PMI), Italy Trade Balance (Dec), Eurozone Manufacturing and Services PMI (Jan), US Manufacturing PMI (Jan) and Existing Home Sales (Dec), Japan Manufacturing PMI (Jan), China HSBC Manufacturing PMI (Jan), UK Retail Sales (Dec), Canada CPI (Dec) and Core Retail Sales (Nov)
Gold traded below the highest level in five years on Thursday amid profit-taking ahead of key monetary policy decision by the European Central Bank, as well as gains of Asian equities that sapped bullion's safe-haven appeal. 93% of market participants expect the ECB to embark on massive quantitative easing as soon as today to shield the region's economy from deflation and revive growth. The central bank's stimulus measures might boost demand for the precious metal, but gold could have already priced in the ECB factor. Assets in the SPDR Gold Trust, the world's top gold-backed exchange-traded fund, declined by 0.24% to 740.45 tonnes on Wednesday.
Meanwhile, US housing starts soared more than expected in December, reaching the highest level in more than six and a half years. Groundbreaking for single-family homes surged 4.4% to a seasonally adjusted annual rate of 1.09 million units, according to the Commerce Department. November's housing starts were also revised up to 1.04 million units. Construction started on new US homes advanced 8.8% to 1.01 million units in 2014 from the previous year, which is the highest level since 2007.
Manufacturing PMI data across the world to dominate in news tomorrow
Following today's ECB announcement, the next bunch of potential influential drivers for gold is arriving as soon as on Friday. The majority of it, in particular, will be connected with production sectors of different economies, as PMI indicators are due to be published in Germany, France, Eurozone, US, Japan and China. Moreover, German and French data will be accompanied by the same index for services industry of these countries.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
It seems that at the moment the yellow metal is remaining under a strong support from the monthly R2 and 61.8% Fibonacci retracement around $1,285. The most recent bearish attempt failed to push gold downwards. At the same time, yesterday the previous metal has also tried to breach the closest important resistance at $1,302 represented by the weekly R1, but had to return back below the round level. Still, daily and weekly technical indicators continue giving signals to buy the bullion; therefore, soon we may see a renewal of the bullish trend.
Hourly chart
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 22 and Jan 22 expect, on average, to see Gold trading around 1,290 by the end of April. At the same time, 46% of them believe the bullion will be above $1,300 in three months, while 37% of traders surveyed forecast the bullion to trade in the range between 1,150 and 1,300.