- Opened positions for Gold remain positive with a confident majority of bullish trades (66% bullish / 34% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,307
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,290
- Upcoming events on January 27: ECOFIN Meetings, US Durable Goods Orders (Dec), Services PMI (Jan), Consumer Confidence (Jan) and New Home Sales (Dec), Australia NAB Business Confidence (Dec), UK First Estimate GDP (Q4)
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Still, gold traded near the highest level since August as Greece's anti-austerity Syriza celebrated victory in the snap general elections. The party is seen starting to renegotiate the terms of the international bailout already today, sparking renewed instability in the Euro zone. European leaders, however, stressed that Greece must respect the terms of the 240 billion euro bailout programme. Holdings in the SPDR Gold Trust, the top gold-backed exchange-traded fund, rose to 741.65 metric tons on January 23 to mark a second straight week of gains.
The US flash data on activity in the manufacturing data showed a significant deterioration in January, as the corresponding PMI reading fell to the lowest level in twelve months. The preliminary manufacturing PMI dropped to 53.7 in January, compared with 53.9 in the preceding month. The rate of output growth rose slightly, whereas new business growth declined to the lowest level in a year, according to Markit.
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UK GDP first estimate to be announced on Tuesday
The most significant influence on the precious metal is most probably going to come from the United Kingdom. The Office for National Statistics will publish data on economic growth in the country during three months through December 31. According to expectations, UK economy grew 0.6% on a quarterly basis and 2.8% year-on-year. Besides that, US statistical authorities will release data for durable goods orders and new home sales back in December 2014.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 Friday, XAU/USD cross made an attempt to cross one of the major and closest demand areas at $1,291 and commence a downtrend movement. However, this level, represented by the weekly pivot point and 61.8% Fibonacci retracement pushed the bullion back towards the major level of $1,300. On the other hand, taking into account a strong resistance around $1,310 (weekly R1; 2011 low) and despite bullish technical studies on a daily chart, we expect to see the second bearish attempt to breach the mentioned support line and trade to the south.
Hourly chart
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Bullish majority on Gold unchanged at 66%
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Dec 26 and Jan 26 expect, on average, to see Gold trading just above 1,300 by the end of April. At the same time, 54% of them believe the bullion will be above this mark in three months, while 33% of traders surveyed forecast the bullion to trade in the range between 1,150 and 1,300.
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