- Opened positions on gold are strongly bullish (66% long / 34% short)
- The immediate resistance for the yellow metal is currently located at 1,161
- At the same time, the nearby support for the bullion is placed at 1,154
- Important economic events to follow in the next 24 hours: Germany CPI (Jun) and ZEW Economic Sentiment (Jul), Euro zone Industrial Production (May) and EcoFin Meeting, US Retail Sales (Jun), UK CPI (Jun), China GDP (Q2), Industrial Production (Jun) and Retail Sales (Jun)
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Gold continued to decline on Tuesday amid a stronger Dollar, which has been supported by expectations the Fed will begin hiking interest rates this year. Fed Chair Janet Yellen may provide more hints of a looming rate increase at her semi-annual testimony to Congress on Wednesday and Thursday, attracting global attention to the US central bank from Greece, which agreed to an 86-billion-euro bailout in exchange for tough reforms.
Meanwhile, estimates of growth in the US gross domestic product from the Federal Reserve Bank of Atlanta, Macroeconomic Advisers and Barclays Capital suggest the world's biggest economy rebounded in the second quarter after the winter slump. The US economic output is predicted to have risen at an annual rate of above 2%, after contracting in the first three months of the year at a 0.2% pace. The estimates bolster the broadly held opinion among economists and policy makers that the US economy's winter weakness was caused by temporary factors such as bad weather and West Coast port closings.
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China's economic growth at risk of falling below 7%
All attention in the next 24 hours will be turned to China, where a bunch of important economic indicators are going to be released. The country's GDP has probably increased by just 6.9% in the second quarter of this year. Moreover, retail sales and industrial production for June are not estimated to bring any encouragement as well. All of these indicators are due in the night between Tuesday and Wednesday at 2:00 AM GMT. In Europe, an annual inflation reading in Britain is likely to slow down to zero in July (data at 8:30 AM GMT), thus putting additional pressure on the Bank of England.Read More: Fundamental Analysis
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 1,115. Among recent developments, in March 2015 the yellow metal resumed gaining value, even without touching the lower trend-line, but the growth stalled beneath the 2009 high at 1,230. In the foreseeable future the rally is likely to be limited and the bullion should be driven by the 200-day SMA around 1,200, which has 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
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XAU/USD was moving freely around the weekly pivot point at 1,161 on Monday. Therefore, this level failed to put any restriction on a downside development. Gold decided to test the 1,154 mark, which is acting as a temporary support at the moment. However, the bullion is forecasted to make additional bearish attempts in the near term. A close below this monthly support may result in a further drop down to the Bollinger band at 1,143, which also represents the lower boundary of the bearish channel formed by XAU/USD in June-July.
Hourly chart
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Read More: Technical Analysis
SWFX sentiment strongly bullish toward gold
Meanwhile, OANDA's bulls are in the safe majority with 77.57% of all current positions. Gold's sentiment at there is the second most positive among all major crosses at the moment. Saxo Bank market participants are also optimistic towards to the precious metal, as there are 72% (+4%) of bullish trades registered in the morning on July 14.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jun 14 and Jul 14 expect, on average, to see Gold trading just below 1,170 by the end of October. At the same time, 54% of them still believe the bullion will be strongly above 1,150 in three months, while 32% of traders surveyed forecast the bullion to trade in the range between 1,000 and 1,150.
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