- Opened positions for Gold stay positive (58% bullish / 42% bearish)
- It is possible that Gold will grow in price, with the closest resistance for it located at 1,233
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,215
Gold decline in price ahead of the Fed meeting, which may shed light on the central bank's monetary policy outlook. The recent plethora of positive data from the world's number one economy could sharpen the case for the Fed to adhere to a more hawkish stance. Nevertheless, Paul Krugman, the Novel Prize winning economist, said that central bankers are unlikely to lift interest rates next year as they struggle to boost inflation amid weak global economic growth. The FOMC is due to release its last statement this year after two-day meeting on Wednesday.
Meanwhile, US wholesale prices were pushed down by declining gas and food costs in November, adding to signs that cheaper oil worldwide is curbing inflationary pressures. Producer price index dropped 0.2% in November, after climbing by the same amount a month earlier, according to the Labor Department. However, a core measure of producer inflation, which excludes food, energy and trade services, was flat.
UK data to influence Gold the most on Tuesday
On the second day of the present working week, the yellow metal is likely to be driven by news from Europe, including such countries as Germany and the United Kingdom. The former will show data on ZEW economic sentiment in December and Markit manufacturing PMI. British data, however, will include the claimant count change, unemployment rate, inflation and average change in earnings, which altogether are likely to drive Gold's price tomorrow.XAU/USD jumps above down-trend despite bearish forecasts
The XAU/USD cross has breached the most important resistance line, represented by the long-term downtrend and is now developing above this level. At the same time, there is a chance for Gold to return back, in case the US currency recovers in the foreseeable future and economic conditions improve globally. At the moment the most considerable resistance is represented by the monthly R2 and weekly R1 at $1,244, while the downtrend changed the role to become the main support. Nevertheless, by the end of the year we would suggest the Gold to depreciate and trade in the direction of the major level at $1,200.Daily chart
The price of Gold changed only marginally on Friday, as the bullion decreased to trade around $1,220 per ounce. At the moment the yellow metal is well supported by this week's pivot point at $1,215, which we do not expect to be breached easily. However, if the XAU/USD cross succeeds in doing that, we can see the extension of the bearish move down to the next major support at $1,205 (monthly R1; 55 and 20-day SMAs).
Hourly chart
Market sentiment remains bullish on Gold in majority of trades
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Nov 15 and Dec 15 expect, on average, to see the pair just below 1,200 by the mid-March. At the same time, 45% of them believe Gold will be above this mark in three months, while one third of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.