- Market sentiment is 52% short
- 55% of pending orders in 1000-pip range are set to SELL gold
- Metal's price remains below 1,340.00 mark
- Upcoming US data
The pair broke the resistance, which kept it down on Tuesday. The metal is set to revel new patterns, which should be aimed upwards. The market didn't even need any additional signals about the US economy, as the Greenback fell down. That also caused the surge of commodity prices like the yellow metal.
The US government posted a $49B budget surplus in the month of January, the Treasury Department stated on Monday. The report also showed that the US fiscal gap rose 11% to $175.7B in the four month period to January, compared to the same period a year ago.
The gap is anticipated to widen further as an aging population increases spending on retirement programs and healthcare. The proposed budget released on Monday revealed the deficit widening to $984B in 2019, assuming that Congress would adopt all of the President Trump's proposals, including cuts of spending.
Data on Wednesday
There will be a major data release occurring at 13:30 GMT in the US. Namely, the US CPI and US Retail Sales data sets and their associate data will be published at the same time.
The release is set to be covered by the Dukascopy Research team on the bank's live webinar platform. Tune in by clicking on the notification on the Dukascopy trading platforms. Or one can just google the Dukascopy webinars.
XAU/USD breaches resistance
Contrary to expectations, the upper channel boundary and the 200-hour SMA near 1,330.00 did not provide enough resistance to pressure the rate south on Tuesday.
The pair remained sticky to this cluster, thus providing and early indication of the likely breakout north, even despite signals technical signals pointing to the prevailing bearish sentiment.
By Wednesday morning, the yellow metal had reached the monthly PP, the weekly R1 and the 23.60% Fibo retracement circa 1,338.00.
The base scenario favours the pair edging lower during the following trading hours just to make a rebound from the breached channel. Subsequently, the 200-hour might successfully support the pair and thus allow for a continuous surge, setting the 1,350.00 mark as today's high.
Hourly Chart
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 eventually prevails until the 55- and 100-day SMAs and the 23.60% Fibo retracement near the 1,300.00 mark is reached sometime this week.
Daily Chart
Market sentiment on the bearish side
SWFX market sentiment is currently standing at equilibrium, compared to 52% of open positions being short during the previous session. Meanwhile, 55% of pending commands are once again to buy the commodity (+3%).
OANDA traders are bearish, as 51% of open positions are short (-2%). Meanwhile, SAXO bank traders are still bullish with 51% long positions.