- SWFX traders are 56% bearish (+4%)
- 80% of pending orders in 1000-pip range are set to SELL gold
- Metal faces notable resistance at 1,338.00
- Upcoming events: FOMC Members Dudley and Williams to speak
The yellow metal seems to be the only asset not affected by the panic occurring this week in the markets. However, it is highly possible that a lot of the market participants, which are selling their equities, will buy gold as a hedge. That will propel the metal's price higher.
Economic activity in the US services sector was the strongest in more than 12 years, supported by rising new orders, suggesting that the economy sustained the strong momentum in the beginning of the year. The ISM survey showed that its non-manufacturing PMI jumped to 59.9 in January, from 55.9 in the prior month.
The US economy kept expanding even before the stimulus from a $1.5T tax cut program has begun to filter through. However, that is likely to cause some concerns that the country's economy could overheat.
No releases, watch equity markets
This trading session is expected to be relatively calm, as only two speeches by FOMC members are on agenda. The President of the Federal Reserve Bank of New York William Dudley will speak about banking culture at a joint Thomson Reuters / the European American Chamber of Commerce event at 1330GMT; while his counterpart in San Francisco John Williams is due to speak at a community leaders luncheon at 2230GMT.
XAU/USD slightly recovers
Gold began Tuesday's trading session in a calm manner, thus fluctuating between the 100– and 200-hour SMAs for several hours. However, the bearish sentiment eventually took over, and the pair dashed through the 100– and 55-hour moving averages, the weekly and monthly PPs, the 23.60% Fibo retracement, as well as breached the dominant two-month channel up. As a result, the yellow metal closed the session with a 1.19% decline.
The rate bounced off the weekly S1 on Wednesday morning and was moving towards a massive resistance cluster formed by the previously-breached levels. It is likely that this area is reached today for the pair to make a retracement from the bottom channel line; however, its subsequent fall is unlikely to change the overall price level within the following 24 hours.
Hourly Chart
Strong downside risks drove XAU/USD on Tuesday, as it fell 1.15% during this session. The pair halted at the weekly S1 which is currently pressuring the pair to recover some of its daily losses.
The medium-term outlook points to a continuous decline. After hitting the 2017 high of 1,360.00, Gold is showing weakness against the Greenback. It is likely that the current movement south prevails until the the 55-day SMA near the 1,310.00 mark is reached sometime closer to the end of February.
Daily Chart
Market sentiment on the bearish side
SWFX market sentiment is increasingly bearish on Gold, as 56% of open positions are short (+4%). However, 53% of pending commands are set to buy the commodity (+1%).
OANDA traders are bearish, as 59% of open positions are short (+2%). In addition, SAXO bank traders are 53% bearish.