- Opened positions on Gold remain positive with a confident majority of bullish trades (67% bullish / 33% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,249
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,229
- Upcoming events on February 10: France, Italy Industrial Output (Dec), US Wholesale Inventories (Dec), China CPI (Jan), Switzerland Unemployment Rate (Jan) and CPI (Jan), UK Industrial Production (Dec) and NIESR GDP Estimate (Jan)
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The precious metal remained close to a three-week low of $1,228.25 on Friday following strong US labour market data, which fuelled expectations of the Fed's interest rate hike. China, the world's second biggest economy, saw its trade performance deteriorating in January, with exports plummeting 3.3% on an annual basis, while imports dived 19.9%. The worse than expected Chinese data stoked concerns over the country's growth prospects, boosting gold's appeal as a safe haven asset.
The US job growth gained momentum, while wages rose, indicating strength of the US economy. US nonfarm payrolls increased to 257,000, up from the expected 236,000, which led to a rise in confidence in the job market. This January has been the 11th month in a row, when job gains were over 200,000. Hence, a rise in the labour force was the main driver behind an increase in the unemployment rate, which edged up by 0.1 percentage point to 5.7%.
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UK GDP estimate, manufacturing production to be announced on Feb 10
The most important bunch of fundamental statistics and estimates will be published in the United Kingdom on Tuesday. Both UK industrial and manufacturing production have probably cooled down in December after a strong climb a month before. Moreover, the NIESR Institute will predict Britain's pace of economic growth during three months through January. This data is assumed to increase Gold's volatility tomorrow. At the same time, additional drivers are also considered to be the CPI data from China and Switzerland, as well as the latter's unemployment rate for January.Read More: Fundamental Analysis
XAU/USD forms down-trend after touching 1,307
XAU/USD cross breached the most important resistance on January 3, represented by the long-term downtrend line, which is currently located at 1,201. Consequently, it started to develop above this level to hit the 1,300 mark already on January 21. It, in turn, used to act as a strong supply for Gold in order to resume declining. If the bullion comes under uplifted bearish pressure and manages to consolidate below 1,250 by the mid-February, then we may see the metal's gradual decrease in price back towards 1,200 in the medium-term. Moreover, the long-term outlook for the yellow metal is also remaining negative, mostly reflecting strength of US fundamental factors and QE potential effects in Europe. Therefore, in course of the first quarter the bullion is suggested to lose value.Daily chart
© Dukascopy Bank SA
Gold has finally managed to pierce through a tough support zone around 1,260 on Friday as the precious metal declined considerably on strong labour market data from the US. As a result of that, five technical levels were crossed simultaneously during one bearish move at the end of last week. XAU/USD was only stopped by the 38.2% Fibonacci retracement at 1,229, which started to push Gold upwards on Monday. Being reinforced by 55-day SMA, it is expected that the bullion will manage to rebound towards 1,245 in the near term.
Hourly chart
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Read More: Technical Analysis
SWFX opened trades keep bullish advantage
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jan 9 and Feb 9 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 28% of traders surveyed forecast the bullion to trade in the range between 1,150 and 1,300.
© Dukascopy Bank SA