- SWFX traders are 53% bearish
- 63% of pending commands are to buy the metal
- The bullion opened at 1,267.71
The bullion proved once again to be unable to confirm the gains posted on Friday's trading session and erased the motion on Monday, continuing the ranging pattern it has been trading inside of for the last four sessions. XAU/USD has not set solid levels to watch on the daily time-frame and we will look for strong tests of either one of those if a breakout is to come. Resistance at 1,269.43 and support of 1,262.62 are the areas in question for today.
The US economy expanded at its weakest pace since the Q1 of 2014 in the three-month period to March, as consumer spending barely rose; however, a rise in business investment and improving pay growth held out hopes that the economy would regain momentum in the upcoming quarters. The Department of Commerce reported on Friday that the economy grew at a 0.7% annual pace in the Q1, following the preceding quarter's 2.1% and falling behind expectations for a 1.3% climb. The March quarter growth raised doubts over the Trump administration's ability to boost GDP growth and deliver economic reforms. Consumer spending, the largest contributor to US economic growth, advanced just 0.3%, the weakest since 2009. The Q1 economic slowdown was partially driven by the unusually warm weather, high volatility in inventories and the strong US Dollar. However, Friday's data showed a pickup in both wage and business investment growth. Therefore, analysts suggest that economic growth will likely rebound in the upcoming months. Moreover, the report showed a jump in inflation that would probably please the Federal Reserve and force it to raise rates at a quicker than expected pace. The next interest rate hike is largely expected to come in June.
Upcoming events: US ISM Manufacturing PMI
With banking holidays in several countries around the world leading the fundamental trend on Monday, XAU/USD is expected to remain calm, aside from one impactful data release in the United States. The ISM Manufacturing PMI is coming out at 15:00 GMT, and could stir up some volatility following Mnuchin's speech at 12:45 GMT.
Gold lacking any momentum
Gold continued the indecisiveness on the daily chart maintaining the overall ranging motion by slipping from the top it had managed to post on Friday. A strong red candle showed daily risks being skewed to the downside, setting eye on 1,260.48, the Weekly S1. The amplitude of the dip might be a certain display of today's trading range, as no levels in between are likely to mess with the motion. Upside potential is likely to be cut around 1,269.43/77 where a cluster of resistances are to provide supply in case XAU/USD takes a different path over the day.
Daily chart
Gold appears to be working on establishing a trading range on the hourly time-frame with two solid confirmations of both the upper and lower range bounds. In case the pair continues to respect the range and now makes a move towards the resistance level, a strong cluster will come into play on the way around 1,265.76/1,266.22 and might spill in some flatness. The range support rests at 1,262.02/62, while the upper bound is located at 1,270.94.
Hourly chart
Bulls show dominance
SWFX market sentiment remains bearish, as 53% of open positions are short. However, 63% of pending commands are to buy the bullion.
OANDA Gold traders are bullish regarding the metal, as open positions are 61.59% long on Monday, compared to 59.94% previously. Meanwhile, traders of SAXO bank are also bullish, as 64.00% of open positions are long, compared to 60.93% positions on Friday.
Spreads (avg, pip) / Trading volume / Volatility
Market participants foresee the price of gold being above 1,316 early August
Traders who were asked regarding their longer-term views on gold between April 1 and May 1 expect, on average, to see the metal near 1,316 early August. Generally, 62% (+3%) of participants believe the price will be above 1,300 in ninety days. Alongside, 33% of those surveyed reckon the metal will trade in the range between 1,100 and 1,300 over the next three months.