- Opened positions for Gold remain positive with a confident majority of bullish trades (73% bullish / 27% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,268
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,262
- Upcoming events on February 7-9: Germany Current Account (Dec) and Trade Balance (Dec), China Trade Balance (Jan), Japan Current Account (Dec), Trade Balance (Dec) and Consumer Confidence (Jan), Canada Housing Starts (Jan)
Gold is still little changed as investors are awaiting important US employment data later today. Yet, bullion is heading towards the biggest weekly drop in almost two months following a strong start of the year. A strong US employment data would add to speculation of the Fed hiking interest rates by mid-year, sapping the investment appeal of non-interest yielding assets such as gold. Economists predict that US non-farm payrolls rose by 234,000 in January, following the 252,000 increase in the prior months, marking the twelfth consecutive month of job creation above 200,000, the longest streak since 1994. Holdings at SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, jumped to 24.86 million ounces on Thursday, the highest level since September.
Meanwhile, the US trade deficit unexpectedly widened in December to the highest level since 2012 as imports increased despite lower energy costs, which will negatively affect the fourth-quarter growth revision later this month. According to the Commerce Department, the trade gap increased 17.1% to $46.6 billion, the largest since November 2012 and the biggest percentage increase since July 2009.
Japan, China and Germany trade balance due to be released on Monday
The vast part of fundamental news on Monday will come from outside the Unites States and mainly from Asian countries. Both Japan and China, along with Germany alone in Europe will release numbers on international trade in December (Japan and Germany) and January (China). Besides that, Canadian Mortgage and Housing Corporation will announce a number of housing starts in the country during the first month of 2015. In case of sharp negative changes, demand for Gold is likely to increase in the beginning of a new week.XAU/USD keeps medium-term bullish momentum
The XAU/USD cross has breached the most important resistance line on January 3, which is represented by the long-term downtrend at $1,218. Consequently, it started to develop above this level to hit $1,300 mark already on January 21. At the moment, it seems unlikely for Gold to be able to return back below $1,200 in the foreseeable future. Moreover, if the bullion manages to remain above $1,250, then we may see metal's further increase in the medium-term. Nevertheless, the long-term outlook for the yellow metal tends to remain negative, mostly reflecting strength of US fundamental factors and gradual recovery in Europe. Therefore, in towards the end of Q1 2015 gold is still suggested to lose value.Daily chart
It seems that Gold is decreasing its trading range due to strong boundaries which are limiting moves of the bullion. Yesterday, the long-term downtrend pushed the precious metal below 1,270 for one more time, while a strong support is provided by demand ten US Dollars from below. Therefore, outlook for the short-term is neutral, with sideways movement forecasted as the most appropriate development in current conditions. A major break-out to either side, however, may take place in the middle of the next week.
Hourly chart
SWFX opened trades on Gold become more positive
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jan 6 and Feb 6 expect, on average, to see Gold trading around 1,310 by the end of May. At the same time, 58% of them believe the bullion will be strongly above this mark in three months, while 29% of traders surveyed forecast the bullion to trade in the range between 1,150 and 1,300.