- Opened positions on 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 1,226
- At the same time, the probability of a downside movement exists as well, with the closest support being placed at 1,215
- Upcoming events on February 13: Eurozone, Germany, France and Italy Gross Domestic Product (Q4), Eurozone Trade Balance (Dec)
Gold reached its lowest level in five weeks, as the uncertainty over Greece's future dominated the market. Greece's and Euro zone's officials failed to reach an agreement after seven years of talks in Brussels. The negotiation will resume next week. Meanwhile, global demand for gold declined in 2014 as buying fell in two world's biggest gold-consumers, China and India, according to the World Gold Council. Total demand in 2014 was 3,924 tons compared with 4,088 tons the previous year. However, gold demand growth rose into the end of the year, as December-quarter demand was 988 tons, up 6% from the same period the year before.
Meanwhile, according to Federal Reserve Bank of Richmond President Jeffrey Lacker's opinion, June is an appropriate timing for the first interest rate hike in the US. Still, the normalisation of the Fed monetary policy continues to depend on economic data, but it should be unexpectedly soft in order for Lacker to change his view. In addition, San Francisco Fed President John Williams also said that the US central bank was getting "closer and closer" to rate hike, referring to "really strong" hiring.
Gold to be influenced by GDP data from Eurozone
On the last day of this working week, the bullion will be mostly driven by news from Europe. The biggest countries of the common currency bloc are going to release GDP numbers for the last quarter of 2014. While Germany's growth is expected to gain momentum and show a 0.3% increase on a quarterly basis, France's economic expansion has probably slowed down to just 0.1% in Q4. As downside risks are still in place, Gold will be potentially watched as a hedging asset tomorrow in case of worse than expected data from the region.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
After a two-day long pause, Gold continued to decline in price. Yesterday, the precious metal slipped below the closest demand area at 1,230 which was represented by the 38.2% Fibonacci retracement and 55-day SMA. At the same time, the next support is already getting ready to fight against a further plunge of the bullion's price. It is located close to the current trading level, namely at 1,215 (weekly S1; 100-day SMA). This line is assumed to provide the yellow metal with a short-term bullish momentum, but the medium-term expectations are remaining firmly bearish.
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 12 and Feb 12 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 26% of traders surveyed forecast the bullion to trade in the range between 1,150 and 1,300.