- Opened positions for Gold remain positive with a confident majority of bullish trades (73% bullish / 27% 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, while for that purpose the closest support is placed at 1,274
- Upcoming events on January 30: Germany Retail Sales (Dec), France Consumer Spending (Dec), Spain GDP (Q4), Italy Unemployment Rate (Dec), Eurozone CPI (Jan), US GDP (Q4), Japan Housing Starts (Dec), Switzerland KOF Leading Indicator (Jan), UK Mortgage Approvals (Dec), Canada GDP (Nov)
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Gold continued to decline after the Fed provided an upbeat assessment of current US economic growth and labour market conditions, hinting at an interest rate hike later this year. The prospect of the US rate rise makes non-interest-bearing assets such as bullion less appealing investment opportunity and pushed gold further away from the highest level in five months hit last week. Investors will be keeping an eye on US GDP data on Friday for more information on a performance of the world's biggest economy.
An increasing number of economists expect that the date of the first Fed's rate lift could slip to September or even later. Many Fed officials have pointed to a possible rate increase around mid-year, but they also left the door open to a later move. The Fed has kept its benchmark rate near zero since 2008 to boost borrowing, spending and investment and fuel the recovery following the Great Recession.
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All attention from Fed redirects to GDP data in US, Canada and Spain
Following announcements of the Federal Reserve that were broadly in line with market expectations, investors are redirecting their attention to numbers on economic growth data in world's major economies. On Friday, GDP statistics for the fourth quarter of 2014 will be published in Spain and the US, followed by November's GDP in Canada. Besides that, inflation in the Eurozone has probably slipped even more to reach -0.5% in January on the annual basis. This statistics is also awaited to arrive on January 30.Read More: Fundamental Analysis
XAU/USD keeps medium-term bullish momentum
The XAU/USD cross has breached the most important resistance line on January 3, which is represented by the long-term downtrend at $1,218. Consequently, it started to develop above this level to hit $1,300 mark already on January 21. At the moment, it seems unlikely for gold to be able to return back below $1,200 in the foreseeable future. Moreover, if the bullion consolidates well above $1,250, then we may see metal's further increase in the medium-term. 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 towards the end of Q1 2015 gold is still suggested to lose value.Daily chart
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On Wednesday, the precious metal traded mostly in the narrow range between monthly R2 and 61.8% Fibo around $1,285, while the latter level limited any gains proposed by bulls. However, in the night between Wednesday and Thursday the gold fell even below the monthly R2. The closest support for XAU/USD is strengthened by down-trend and weekly S1 which are unlikely to give up easily. Therefore, even despite bullish technical indicators and positive market sentiment, the metal will most probably stay range bound for some period of time in the nearest future.
Hourly chart
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Read More: Technical Analysis
Bullish majority on Gold consolidates above 70%
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Dec 29 and Jan 29 expect, on average, to see Gold trading just above 1,300 by the end of April. At the same time, 52% of them believe the bullion will be strongly above this mark in three months, while 35% of traders surveyed forecast the bullion to trade in the range between 1,150 and 1,300.
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