Gold retreats to SMA

After almost touching the 1,750.00 mark on Tuesday, the yellow metal declined to the 55-hour SMA near the 1,710.00 level.

The metal's price was expected to trade sideways until it would resume its surge.

Due to the fundamental changes in the markets, Dukascopy Analytics suggests to note the scheduled macroeconomic events, but avoid using historical data for guidance.

Namely, the whole world changes the money supply by announcing monetary stimulus and government expense increases. In other words, the central banks are creating more money and giving it to governments to stop the effects of the coronavirus. In effect, each announcement causes a fall of the currency that it affects.

On Thursday, all attention is expected to be set on the weekly US Unemployment Claims. During the last weeks this announcement has been revealing shocking data, as during a two week period almost ten million US workers claimed unemployment benefits. The unemployment claims were previously ignored as they had stopped causing market reactions.

XAU/USD short-term forecast

It is likely that yellow metal could gain support from the 55-hour moving average near 1,715.00 and extend gains against the US Dollar in the short term. In this case the rate could exceed the 1,740.00 level.

However, if the exchange rate fails to surpass the 1,740.00 mark, it is likely that gold could consolidate against the Greenback within the following trading session.

Also, it is unlikely that bears could prevail in the market, and the price for gold could decline below the 100-hour SMA near 1,690.00.

Hourly Chart

Weekly Chart

Short sentiment decreases

On Tuesday, the Swiss Foreign Exchange sentiment was 56% short. Namely, 56% of open gold position volume was in short positions.

By the middle of Wednesday's trading, the sentiment was 53% short.