- Opened positions for Gold remain positive, even though advantage of longs decreased noticeably (58% bullish / 42% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,283
- At the same time, the probability of a downside movement exists as well, with the closest support being placed at 1,275
- Upcoming events on January 21: US Building Permits (Dec) and Housing Starts (Dec), Bank of Japan Press Conference and Foreign Bond Investment, UK Claimant Count Change (Dec) and Unemployment Rate (Nov), Bank of England MPC Meeting Minutes, Bank of Canada Monetary Policy Report and Interest Rate Decision
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Gold is supported by safe-haven bids amid market volatility triggered by concerns over Europe's economy and global growth fears. Investors are awaiting the ECB's Governing Council meeting this Thursday, which might see a launch of a broad-based asset purchases. In addition to that, a survey published on Sunday in newspaper To Vima showed Greece's leftist anti-austerity party Syriza is holding the lead in opinion polls a week ahead of the general election on January 25, adding to the market nervousness.
Among fundamentals from world's largest economies, Australian inflation dropped to the slowest pace in more than two years in December as petrol prices declined, adding to further evidence that the Reserve Bank of Australia may consider another cut in interest rates if required to prop up the nation's economy. The TD Securities-Melbourne Institute's monthly gauge of consumer prices remained unchanged in December from the previous month, when it climbed by 0.1%.
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Central banks in UK, Japan, Canada to release data on Wednesday
Wednesday of this week will be marked by important information that is going to be revealed by a number of central banks from around the globe. They include the Bank of England, where minutes of the last MPC meeting will be released. Meanwhile, British data will also be fuelled by labour market statistics for November and December. Back to central banks, the Bank of Canada will make a decision on the main interest rate and hold the press-conference afterwards. The Bank of Japan, in turn, will publish the monetary policy statement.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 develop 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 in the foreseeable future. If the bullion consolidates above it, then we may see metal's further increase in the medium-term, with the goal at 2011 low at $1,307. Nevertheless, the long-term outlook for the yellow metal tends to remain negative, mostly reflecting strength of US fundamental factors and gradual recovery in Europe. Therefore, in February-March Gold is still suggested to lose value, which may follow the present rebound soon.Daily chart
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On Monday, gold continued to be rather well supported by the long-term downtrend line which takes its beginning point in July 2014. As a result, XAU/USD cross has put itself in the narrow range between the mentioned support and monthly R2 at $1,283. Judging from technical indicators on both daily and weekly charts, the bullion should gain enough bullish momentum from the $1,275 level to continue gaining value. On the other hand, the nearest supply area is reinforced by the 61.8% Fibo and Bollinger band around $1,295.
Hourly chart
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Bullish majority on Gold drops even more to 58%
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Dec 20 and Jan 20 expect, on average, to see Gold trading around 1,260 by the end of April. At the same time, 58% 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 1,100 and 1,250.
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