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"Chinese traders returning from their week-long Chinese New Year holiday, plus the temporary dip below $1,200 on Tuesday, prompted bargain hunting and short-covering in gold by investors."
- Phillip Futures (based on Bloomberg)
Pair's Outlook
XAU/USD is currently extending Wednesday's rally from 1,200, but it may encounter fierce resistance between 1,215.80 and 1,211.90, where the weekly PP merges with the 100-day SMA. If this area fails as a ceiling, another high concentration of selling orders is supposed to be near 1,226, where the weekly R1 joins forces with the 20- and 55-day SMAs. Meanwhile, taking into account the monthly technical indicators, the overall bias with respect to gold is bearish, meaning 1,200 is unlikely to remain the lower boundary of the trading range in the long run.
Traders' Sentiment
The SWFX market is becoming less optimistic regarding the bullish potential of the precious metal, though the bulls are still in a distinct majority. While yesterday 69% of all traders were expecting the price to increase, today already 65% of open positions are long, which is below the 10-day average of 62%.
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