- Opened positions for Gold remain positive with a confident majority of bullish trades (63% bullish / 37% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,270
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,261
- Upcoming events on February 5: Germany Factory Orders (Dec), US Unemployment Claims (Jan 30) and Trade Balance (Dec), Australia Retail Sales (Dec), ECB Economic Bulletin, Bank of England Interest Rate Decision and Asset Purchase Facility, Canada Trade Balance (Dec)
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Gold declined in the previous trading session amid the news that Greece's government gave up its plan to persuade its creditors to write down the nation's foreign debt, a move which brings Greece closer to end a standoff with Troika. This, in turn, boosted investors' appetite for risky assets such as equities, reducing demand for bullion, which is considered to be safe haven. Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell to 24.59 million ounce on Tuesday from 24.65 million ounce the day before, which was the highest level since October.
Orders for US-manufactured goods declined for a fifth consecutive month in December, marking the longest streak since the Great Recession ended. According to the Commerce Department, new orders for factory goods dropped 3.4%, following the 1.7% decline in November and beating economists' expectations for a 2.2% decrease.
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ECB to publish first Economic Bulletin on February 5
Among economic drivers that are likely to influence the price of yellow mental on Thursday of this week, the most important ones tend to come from the UK. The Bank of England is going to announce its interest rate decision tomorrow; however, no changes are estimated and dovish stance is forecasted to remain in place. Besides that, the ECB will publish its first ever Economic Bulletin which is replacing the Monetary Policy Bulletin of previous years and is summing up main points from the latest Governing Council meeting of Jan 22.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 manages to remain 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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Despite a failure to violate the support line represented by weekly PP at $1,278 for the first time, Gold managed to do so with the second attempt on Tuesday. Moreover, a decline of XAU/USD cross continued and it plunged down to the 50% Fibonacci retracement around $1,261. This level, however, is strengthened by another cluster of supports which are unlikely to give up easily and let bears go beyond $1,250. Taking it into account, the short-term outlook for the bullion is moderately bullish at the moment.
Hourly chart
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SWFX opened trades on Gold drop again below 70%
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jan 4 and Feb 4 expect, on average, to see Gold trading around 1,300 by the end of May. At the same time, 55% of them believe the bullion will be strongly above this mark in three months, while 32% of traders surveyed forecast the bullion to trade in the range between 1,150 and 1,300.
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