- Opened positions on Gold remain positive with a confident majority of bullish trades (69% bullish / 31% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,215
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,201
- Upcoming events on February 20: France, Germany, Eurozone and US Manufacturing PMI (Feb), France and Germany Services PMI (Feb), UK Retail Sales and Public Sector Net Borrowing (Jan), Canada Retail Sales (Dec)
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On Thursday, however, Gold rose for a second session in a row as the Fed sounded unexpectedly dovish, saying that interest rates will be kept unchanged at historic low levels for longer amid concerns over low inflation and fears of derailing the US economic recovery. Expectations that the Fed would hike rates as early as June were hurting non-interest-yielding assets like bullion in recent months. Investors were also closely watching developments in Europe, where Greece will ask for a six-month extension of its European loan agreement today. Yanis Varoufakis, Greek Finance Minister, expressed optimism that a deadlock with other Euro zone member states could be broken by the end of the week, saying he hoped Greece's proposal would be accepted.
Meanwhile, US producer prices fell the most in five years in January amid plunging energy costs, suggesting the nation's inflation will remain benign in the near term. The Labor Department reported that its producer price index for final demand dropped 0.8%, the biggest decline since November 2009, after falling 0.2% in December.
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UK borrowing and retail sales statistics to drive markets on Friday
Among potential Gold influencing factors during the last day of this week, the United Kingdom is releasing very important data tomorrow, which includes the public sector net borrowing and retail sales for January. While the former indicator is expected to improve, retail sales are likely to decline 0.2% after a 0.4% increase in December. Besides that, several developed countries around the world will have their production and services PMI indicators released on February 20.Read More: Fundamental Analysis
XAU/USD develops inside bearish channel on daily chart
On January 22, the level at 1,300 which acted as a strong supply for Gold forced the yellow metal to resume declining. Moreover, the bullion succeeded in consolidating below 1,250 during the second week of February, following a day of considerable decline in price on February 6. Taking into account strength of US fundamental factors and potential positive effects from the expanded asset purchases programme in the Eurozone, the long-term outlook for Gold is remaining fairly bearish. Even though some medium-term bullishness can be created by a major level at 1,200, the precious metal is likely to develop below this level in course of March. Moreover, in case of consolidation below the 2013 low at 1,180, a drop down to 2014 low at 1,130 will be broadly expected to take place toward the end of April.Daily chart
© Dukascopy Bank SA
On Wednesday, the yellow metal made an attempt to cross the major level at 1,200 for the first time since January 5. At the same time, Gold was sent back to the upside by demand area represented by weekly S2 and monthly S1. It seems that these levels gave the bullion some positive impetus in order to rebound, and at the moment it is already testing strength of resistance at 1,215 (weekly S1; 100-day SMA). However, keeping in mind bearish signals from technical indicators and development inside the channel down pattern, we do not see Gold going far beyond this mark in the foreseeable future.
Hourly chart
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SWFX opened positions stay on positive side
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jan 19 and Feb 19 expect, on average, to see Gold trading around 1,265 by the end of May. At the same time, 57% of them still believe the bullion will be strongly above 1,250 mark in three months, while 28% of traders surveyed forecast the bullion to trade in the range between 1,100 and 1,250.
© Dukascopy Bank SA