The yellow metal trades above the 1,700.00 level. By the middle of Tuesday's GMT trading hours, the rate had almost reached the 1,730.00 level.
However, additional gains were not expected, as the rate had begun to trade sideways around the 1,720.00 mark.
Due to the fundamental changes in the markets, Dukascopy Analytics suggests to note the scheduled macroeconomic events, but avoid using historical data for guidance.
Namely, the whole world changes the money supply by announcing monetary stimulus and government expense increases. In other words, the central banks are creating more money and giving it to governments to stop the effects of the coronavirus. In effect, each announcement causes a fall of the currency that it affects.
During the week, data is bound to reveal, how the coronavirus has continued to impact the US economy.
On Wednesday, the US Retail Sales data sets are bound to be published at 12:30 GMT. Most likely they will surprise the markets with the reveal of a drop in US consumption.
On Thursday, all attention is expected to be set on the weekly US Unemployment Claims. During the last weeks this announcement has been revealing shocking data, as during a two week period almost ten million US workers claimed unemployment benefits. The unemployment claims were previously ignored as they had stopped causing market reactions.
XAU/USD short-term forecast
On the one hand, it is likely that yellow metal could gain support from the monthly R1 at 1,704.29 and continue to appreciate against the US Dollar.
However, if the rate fails to surpass the 1,720.00 level, it is likely that golf could trade sideways against the Greenback in the short term
Also, it unlikely that bears could prevail in the market, and the price for gold could decline lower than the 1,670.00/1,690.00 area due to the support of the 55– and 100-hour SMAs.
Hourly Chart
The daily candle chart has been replaced with the weekly candle chart. On the chart the high levels of 2012 and 2011 have been added. These levels could provide resistance.
Weekly Chart
Traders take profits and open shorts
On Tuesday, the Swiss Foreign Exchange sentiment was 56% short. Namely, 56% of open gold position volume was in short positions.
Previously, for more than a couple of weeks, trader sentiment was near the 55% long level.
Traders had taken profits during the surge to the 1,720.00 level.