- Opened positions for Gold remain strongly positive (71% bullish / 29% bearish)
- It is possible that Gold will grow in price further, 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 1,218
- Upcoming events on January 13: Italian Industrial Production, US 10-y Bond Auction and Monthly Budget Statement, UK Consumer Price Index
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Gold continued last week's rally, rising to a one-month high amid weakness in the Greenback and a further drop in oil, which boosted safe haven bids for the yellow metal. The US Dollar retreated as optimistic US employment data was offset by an unexpected drop in US wages, adding to more reasons for the Fed to remain patient in hiking interest rates, thus supporting non-interest-bearing bullion. The Dollar index declined from the highest level in nine years hit last week. While weaker oil prices tend to hurt gold since they dampen gold's appeal as a hedge against oil-led inflation, stock markets are undermined by ongoing weakness in oil prices, fuelling the flight to safety.
According to the Labor Department, US employers added 252,000 jobs in December, pushing the jobless rate to 5.6% down from 5.8%. Job gains were broad-based, with private payrolls surging 240,000 and US government employment increasing 12,000. November's non-farm payroll data was revised upwards to show 353,000 jobs were created.
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Gold to receive impetus from UK CPI data tomorrow
While influence from fundamentals factors seems to be rather neutral for the majority of currency pairs today and tomorrow due to lack of individual statistics for major economies except the UK, Gold is likely to receive impetus exactly from the latter country. UK inflation is predicted to fall below 1% and reach 0.7% in December, putting at risk the Bank of England's potential rate hike this year. As a result, in order to hedge from Pound's volatility market participants are likely to invest in the safe-haven metal tomorrow.Read More: Fundamental Analysis
XAU/USD keeps medium-term bullish momentum
The XAU/USD cross has breached the most important resistance line, represented by the long-term downtrend at $1,218 and started to developed above this line again on January 9. At the moment it is hard to say whether Gold is able to return back below this level. If the bullion consolidates above it, then we may see metal's further increase in the medium-term, with the goal at 50% Fibonacci retracement at $1,260. Nevertheless, the long-term outlook for the yellow metal tends to remain negative, mostly reflecting strength of US fundamental factors. Therefore, in course of first months of 2015 Gold is still suggested to lose value, which may follow the present rebound soon.Daily chart
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Following two days of Gold's correction, provided by the long-term downtrend line around $1,220, XAU/USD received a strong bullish impetus from the weekly pivot point / 100-day SMA and jumped more than $15 per ounce to cross the mentioned resistance. Moreover, an advance continued further and at the moment Gold is facing the next supply area represented by December high, 38.2% Fibonacci retracement, monthly R1 and a Bollinger band around $1,235. We assume that this cluster of resistances is not going to let bulls gain more value for Gold in the near term.
Hourly chart
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Read More: Technical Analysis
Long opened positions decrease to 71%
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Dec 12 and Jan 12 expect, on average, to see Gold trading around 1,220 by the end of April. At the same time, 44% of them believe the bullion will be above 1,250 in three months, while 26% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
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