XAU/USD manages to cross resistance at 1,230

Source: Dukascopy Bank SA
  • Opened positions on Gold remain positive with a confident majority of bullish trades (72% bullish / 28% bearish)
  • It is possible that Gold will grow in price further, with the closest resistance for it located at 1,244
  • At the same time, the probability of a downside movement exists as well, with the closest support being placed at 1,230
  • Upcoming events on February 17: Italy Trade Balance (Dec), Germany and Eurozone ZEW Economic Sentiment (Feb), UK CPI (Jan)

© Dukascopy Bank SA
Despite the fact that all main commodities on the market managed to gain strong value during trading on Friday, Gold used to be the worst performer among them as it gained just 0.64%. As many as three commodities registered a jump above 3%. Among them, oil climbed 3.78% and 3.07% for Brent and Crude types of it, respectively, while the price of the former was hovering even above $61 a barrel from time to time. Natural gas and silver, however, surged 3.35% and 3.02%, correspondingly.

Gold has also traded higher on Monday, maintaining gains from the previous session, as worse than expected US fundamentals pushed the US Dollar lower and spurred the safe-haven appeal of bullion. Investors are also awaiting a meeting of Euro zone finance ministers later today in Brussels to discuss Greece's financial situation. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped 0.42% to 768.26 tonnes on Friday, suggesting that the sentiment towards gold remained bearish as the outlook for the Greenback was upbeat.

US import prices posted the biggest decline in six years in January, adding to signs that domestic inflation could remain subdued for a while. The Labor Department reported that import prices plunged 2.8% last month, the largest drop since December 2008, after falling by a revised 1.9% in the preceding month. It was the seventh consecutive month of declines in import prices. In the 12 months through January prices fell 8.0%, the largest drop since September 2009.

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British inflation data to drive markets on Tuesday

The most important fundamental data from Europe on Tuesday is assumed to be inflation in the United Kingdom. Following a strong decline of oil prices, the indicator is likely to stay at very low levels for January of this year, thus giving trading impetus for both currency and commodity markets. Besides that, Italy is to reveal trade balance data for December, which will be followed by ZEW economic sentiment in Germany and the Eurozone.


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
© Dukascopy Bank SA

Following disappointing US fundamental statistics, Gold gained confident bullish momentum on Friday. It tried to cross resistance at 1,229 (38.2% Fibo), but failed to do so from the first attempt. On Monday morning, however, the bullion was pushed above this level, which is now also strengthened by weekly PP at 1,230. Despite bearish daily technical studies, if the precious metal preserves its bullish trend, we may see it rebounding towards a bunch of supply levels at 1,244 in the next few days (weekly R1, 20-day SMA).

Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis

SWFX opened trades surge above 70%

Sentiment towards the precious metal is remaining strongly optimistic among SWFX traders, while the total share of long opened positions added as many as ten percentage points over two days of the weekend to account for 72% on Monday. Meanwhile, taking into account perceptions of other market players, OANDA's longs are also enjoying a confident majority at the moment, while their share cooled down slightly from Friday to reach 65% today. SaxoGroup market participants are optimistic with respect to the yellow metal as well, with 61% of bullish positions registered by 7:00 GMT in the beginning of this week, down from 62% before the weekend.













Spreads (avg,pip) / Trading volume / Volatility


Traders, who were asked regarding their longer-term views on XAU/USD between Jan 16 and Feb 16 expect, on average, to see Gold trading around 1,300 by the end of May. At the same time, 56% 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.
© Dukascopy Bank SA

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