- Opened positions on Gold remain positive with a confident majority of bullish trades (69% bullish / 31% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,249
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,229
- Upcoming events on February 11: France Current Account (Dec), US Monthly Budget Statement (Jan), Eurogroup Meeting, Australia Home Loans (Dec), China New Loans (Jan), Japan Machinery Orders (Dec)
Gold rebounded as demand for a safe haven rose amid concerns over Greece's future in the Euro zone as well as a drop in global equities. Risk-off sentiment prevails among investors as the Greek government meets Eurogroup tomorrow to ask for an emergency short-term bridging loan, to provide Athens with more time to negotiate new debt terms. Yet, the outcome is highly uncertain as the Eurogroup chairman stressed that Euro zone governments will not allow a bridging loan to keep Greece financially afloat while it renegotiate a new debt deal. The escalating Ukraine crisis also damped risk appetite and hurt stocks.
According to the Federal Reserve, the US labour market lost some traction in the beginning of the year, after a strong run toward the end of 2014. The labour market conditions index dropped to 4.9 points in January, the weakest level in four months compared to an upwardly revised 7.3 in the prior month. Jack Lew, US Treasury Secretary, said that the world's number one economy has turned the corner, with a strong growth in business activity and jobs.
Only few influencing factors for Gold to be published on Wednesday
It seems that the precious metal will be driven mostly by technical factors in course of Wednesday of this week. From the fundamental part, lack of statistical data will continue having only a minor impact on the yellow metal. Among those to be announced, only Chinese new loans' amount for January and Japanese machinery orders for December are considered to have a medium-level effect on the market, including commodities and Gold, in particular.XAU/USD forms down-trend after touching 1,307
XAU/USD cross breached the most important resistance on January 3, represented by the long-term downtrend line, which is currently located at 1,201. Consequently, it started to develop above this level to hit the 1,300 mark already on January 21. It, in turn, used to act as a strong supply for Gold in order to resume declining. If the bullion comes under uplifted bearish pressure and manages to consolidate below 1,250 by the mid-February, then we may see the metal's gradual decrease in price back towards 1,200 in the medium-term. Moreover, the long-term outlook for the yellow metal is also remaining negative, mostly reflecting strength of US fundamental factors and QE potential effects in Europe. Therefore, in course of the first quarter the bullion is suggested to lose value.Daily chart
As it was expected, a strong support zone created by the 38.2% Fibonacci retracement and 55-day SMA managed to give Gold some bullish impetus on Monday. Following a sharp drop in the end of last week, the metal rebounded towards the weekly pivot point in the morning on Tuesday. The current trading level is located at 1,245, but we do not see the yellow metal jumping far above 1,249 due to strong resistance area in place. Therefore, the bearish scenario is estimated as the moment as the most appropriate for bullion's development in the medium-term.
Hourly chart
SWFX opened trades keep bullish advantage
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jan 10 and Feb 10 expect, on average, to see Gold trading around 1,310 by the end of May. At the same time, 58% of them believe the bullion will be strongly above this mark in three months, while 28% of traders surveyed forecast the bullion to trade in the range between 1,150 and 1,300.