- Opened positions on Gold remain slightly bullish (51% long / 49% short)
- The closest resistance for the yellow metal is currently located at 1,234
- At the same time, the closest support for the bullion is placed at 1,216
- Upcoming events on May 20: Germany PPI (Apr), ECB Non-Monetary Policy Meeting, FOMC Meeting Minutes, BoE Meeting Minutes, Canada Wholesale Sales (Mar)
Gold traded near the highest level in three weeks as recent slew of soft US economic data fuelled speculation the Fed would refrain from hiking interest rates in the short-term. Bullion had risen for five consecutive days to Monday as recent data on US labour market, retail sales and consumer sentiment indicated weakness in the world's number one economy. The weak data reinforced views the US economy was not recovering strongly enough for the Fed to consider raising rates from all-time lows at its next FOMC gathering in June. That view has supported non-interest-paying gold, which tends to experience falling demand with higher rates.
On the contrary, the Reserve Bank of Australia kept door open for further interest rate cuts if needed despite worries over booming house prices in Sydney and Melbourne, the minutes of the last board meeting showed. The RBA cut the official cash rate to a historic low of two 2% on May 5 and the central bank stands ready for further moves amid tepid business investment and weakening China's economic growth.
BoE, Fed meeting minutes to be released tomorrow
On Wednesday, both the US Federal Reserve and the Bank of England will publish minutes of their last monetary policy meetings, which are expected to shed light on any changes in the monetary policy stance in the medium-term.XAU/USD develops inside bearish wedge pattern on daily chart
Since the second quarter of 2013, the bullion has been developing inside the falling wedge pattern, meaning that trading range is decreasing as time goes on. Two pattern's boundaries are represented by the upper trend-line around 1,270 and pattern's support at 1,120. Among recent developments, in March 2015 the yellow metal resumed gaining value, even without touching the lower trend-line. In the foreseeable future gains are likely to be limited and the bullion should be driven by the 200-day SMA around 1,220 with a slight bearish bias. Some short-term gains in the direction of the long-term downtrend (1,270) are not completely off the table, but bears are eventually going to overtake a lead and drive the metal back to the south. The overall negative tendency for Gold seems to be the case in the long run, while at the end of this year the precious metal should to consolidate around 1,150, in case the present trend persists.Daily chart
On Monday, XAU/USD registered only insignificant net price changes. Initially, Gold intended to continue growing and it reached the highest level since Feb 17 just above 1,230. However, bears kept the bullion below the Bollinger band and forced the metal to finish trading at 1,225. In case of short-term weakness, bulls will target 1,213 (monthly R1, 200-day SMA) in order to gain back the positive momentum. Meanwhile, 100 and 200-day SMAs are going to cross each other soon, and this fact should underline XAU/USD's medium-term bullishness.
Hourly chart
SWFX opened positions on Gold remain marginally positive
However, OANDA's bulls continue to enjoy a stable majority with 60.83% of all current positions. Gold's sentiment at OANDA is only the seventh most positive among all major currency pairs at the moment. Saxo Bank market participants are also optimistic with respect to the precious metal, with 56% of bullish opened trades registered by 5:30 AM on May 19.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Apr 19 and May 19 expect, on average, to see Gold trading around 1,200 by the end of August. At the same time, 60% of them believe the bullion will be above this mark in three months, while 23% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.