- Opened positions for Gold remain positive with a confident majority of bullish trades (66% bullish / 34% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,302
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,290
- Upcoming events on January 24-26: Greece Parliamentary Elections, Germany Ifo Business Climate (Jan), Eurogroup Meetings, Japan Trade Balance (Dec), UK BBA Mortgage Approvals (Dec)
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Gold manages to retain the highest level in five months hit earlier this week. Following the ECB monetary policy decision to launch full-blown quantitative easing, thus confirming investors' concerns over the fragile state of the Euro zone's economy and forcing them to escape to safe-haven assets, bullion jumped above $1,300, but retreated later on. Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 740.45 tonnes since Wednesday.
At the same time, US unemployment rate slid to 5.6% in December, down from 5.8% in November, reaching the lowest level since June 2008. The US economy created nearly three million jobs last year. The trends in the US labour market will play a key role in the central bank's decision making process regarding monetary policy normalization.
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Gold to act as hedging asset ahead of Greek elections
It is expected that the bullion is likely to be volatile and may record some gains ahead of the upcoming parliamentary election in Greece. While the single European currency is supposed to react negatively if SYRIZA party wins on Sunday, market participants may increase their gold holdings in order to decrease further risks from political instability in this country.Read More: Fundamental Analysis
XAU/USD keeps medium-term bullish momentum
The XAU/USD cross has breached the most important resistance line, represented by the long-term downtrend at $1,218 and started to develop above this line again on January 9. At the moment it is hard to say whether gold is able to return back below this level in the foreseeable future. If the bullion consolidates above it, then we may see metal's further increase in the medium-term, with the goal at 2011 low at $1,307. 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 February-March Gold is still suggested to lose value, which may follow the present rebound soon.Daily chart
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XAU/USD cross was rather volatile during the trading session back on Thursday, as market reacted to stimulus announcements of the European Central Bank. Gold traded in the range between $1,280 and $1,307 yesterday, covering two important support and resistance areas inside. As a daily result, the bullion closed just below the weekly R1 at $1,301. This resistance line is actively strengthened by the 2011 low just six dollars from above, and they both are unlikely to give up in the foreseeable future. Therefore, on Friday we may observe a consolidation around $1,290.
Hourly chart
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Read More: Technical Analysis
Bullish majority on Gold returns above 60%
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Dec 23 and Jan 23 expect, on average, to see Gold trading at 1,300 by the end of April. At the same time, 51% of them believe the bullion will be above this mark in three months, while 36% of traders surveyed forecast the bullion to trade in the range between 1,150 and 1,300.
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