XAU/USD jumps towards weekly R1

Source: Dukascopy Bank SA
  • Opened positions for Gold remain strongly positive (75% bullish / 25% bearish)
  • It is possible that Gold will grow in price, with the closest resistance for it located at 1,229
  • At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,193
  • Upcoming events on January 7: German Retail Sales and Unemployment Change, Eurozone CPI Flash Estimate and Unemployment Rate, US ADP Non-Farm Employment Change, Trade Balance and FOMC Meeting Minutes, UK Halifax HPI, Swiss Foreign Currency Reserves, Canadian Trade Balance

© Dukascopy Bank SA
On Monday, the bullion was among three main commodities on the exchange market to increase in value. The bullion surged 1.39%, while market leaders used to be silver and corn which added 2.81% and 2.59%, respectively. On the other hand, Crude oil crashed 5.03% yesterday and fell below the $50 mark for the first time since financial crisis of 2009. Brent type followed with even more noticeable plunge of 5.87%. Natural gas, in turn, was down 4.03% during trading.

Gold demand is rising as investors seek safety in the metal while global equities tumble and concerns over Greece's future in the Euro zone intensify. In a sign of brightening investor sentiment, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, inched up 0.25% to 710.81 tonnes on Monday, but remained near the lowest level in six years. Nevertheless, the US Dollar strength may limit any rallies in gold, as an appreciating Greenback makes the yellow metal more expensive for holders of other currencies. The Dollar index climbed closer to nine-year high on Monday, while the Euro traded near the lowest level since 2006.

Meanwhile, Australia's trade deficit came in better than expected, as stronger export volumes helped temper falling commodity prices. The trade gap widened to a seasonally adjusted $925 million in November, which was markedly smaller than the $2 billion deficit predicted by economists. Imports rose 0.7%, reflecting soft domestic demand, while exports climbed 0.6% in the reported month.

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US employment change to have most impact on Gold tomorrow

Even though there is data of very high importance level from the Eurozone which is going to be published tomorrow, Gold traders are likely to pay the most attention to North American and, in particular, to change in US employment level. This statistics is usually influencing US dollar performance rather strongly, which also affects the price of Gold as a safe-haven metal. Additionally, US statistical authorities will publish fresh numbers on country's trade balance in November, followed by FOMC Meeting Minutes.


XAU/USD returns back below down-trend

The XAU/USD cross has breached the most important resistance line, represented by the long-term downtrend and developed above this level for the past week. However, on December 15 Gold returned back, mostly amid fundamental factors. At the moment the most considerable resistance is represented by this long-term downtrend line, which is currently located at $1,225 and strengthened by the 100-day SMA and 38.2% Fibonacci retracement. Therefore, in course of first months of 2015 Gold is suggested to lose value.

Daily chart
© Dukascopy Bank SA

Gold appreciated further on Monday, as it managed to consolidate above the major cluster of support levels around $1,190 and even surpassed the major level at $1,200. Currently XAU/USD is trading just below the next resistance line at $1,210 (weekly R1), which is not considered as a strong one, but is able to calm down bullish pressure. However, if Gold breaches this line, the next obstacle for it is placed just ten dollars to the north at the long-term downtrend. Judging from medium-term technical studies, this supply area may eventually help the pair to resume its long-term movement to the south.

Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis

Long opened positions rise to reach 72%

Distribution between opened positions for buying and selling Gold is still remaining strongly positive and in favor of former, as bulls have a majority with 72% of all trades. It means that bullish majority has added six percentage points from January 2, up to the level seen five days ago. On the other hand, OANDA sentiment among traders became more balanced from Friday's morning. At the moment there are 60% (65% on Friday) and 40% (35%) of long and short positions on Gold, respectively. SaxoGroup bullish market participants, in turn, are holding 60% of all trades, even though their share is down seven percentage points over the weekend.













Spreads (avg,pip) / Trading volume / Volatility


Traders, who were asked regarding their longer-term views on XAU/USD between Dec 6 and Jan 6 expect, on average, to see Gold trading around 1,200 by the end of April. At the same time, 53% of them believe the bullion will be above this mark in three months, while 28% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
© Dukascopy Bank SA

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