- Opened positions on Gold remain positive with a confident majority of bullish trades (71% bullish / 29% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,215
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,201
- Upcoming events on February 19: France CPI (Jan), Eurozone Current Account (Dec) and Consumer Confidence (Feb), ECB Monetary Policy Meeting Accounts, US Unemployment Claims (Feb 13) and Philadelphia Fed Manufacturing Survey (Feb), Switzerland Trade Balance (Feb)
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Gold fell massively on Tuesday and remained near the lowest level in six weeks in the Asian session on Wednesday as equities rebounded on hopes Greece would conclude a deal with its creditors. Moreover, China, the world's second largest consumer of gold, will be closed for a week starting on Wednesday for the Lunar New Year holiday, also removing a key support for bullion prices. Meanwhile, investors are awaiting the release of FOMC meeting minutes later today for hints on when the Fed would begin raising interest rates.
Sentiment among US homebuilders dropped for the second consecutive month in February, but remained above the 50-mark threshold for an eight month in a row, indicating that more builders think that market conditions were favourable. The NAHB/Wells Fargo Housing Market index declined to 55 from 57 in January, against analysts' expectations for an increase to 58.
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ECB meeting minutes, Eurozone current account to be watched tomorrow
The most considerable influence on the price of Gold on Thursday may come from several events that are due to happen in the Eurozone. At first, France will announce its consumer price index for January and Eurostat will release the current account data for the monetary union in December 2014. Moreover, for the first time ever this statistics will be followed by the ECB's minutes of its latest meeting that took place on January 22.Read More: Fundamental Analysis
XAU/USD develops inside bearish channel on daily chart
On January 22, the level at 1,300 which acted as a strong supply for Gold forced the yellow metal to resume declining. Moreover, the bullion succeeded in consolidating below 1,250 during the second week of February, following a day of considerable decline in price on February 6. Taking into account strength of US fundamental factors and potential positive effects from the expanded asset purchases programme in the Eurozone, the long-term outlook for Gold is remaining fairly bearish. Even though some medium-term bullishness can be created by a major level at 1,200, the precious metal is likely to develop below this level in course of March. Moreover, in case of consolidation below the 2013 low at 1,180, a drop down to 2014 low at 1,130 will be broadly expected to take place toward the end of April.Daily chart
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A major resistance for Gold provided by the weekly pivot point, 38.2% Fibo and 55-day SMA managed to send the metal considerably downwards on Tuesday. Over the trading day it lost more than $25 per ounce and closed just above the weekly S2 at 1,204. Moreover, one of the main support areas at 1,215 (100-day SMA, weekly S1) have also been erased. However, despite still bearish short-term technical indicators, a continuation of the down-trend is unlikely on Wednesday, while the closest demand is strengthened by round level at 1,200 and monthly S1 at 1,198.
Hourly chart
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SWFX opened trades stay on positive side
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jan 18 and Feb 18 expect, on average, to see Gold trading just below 1,300 by the end of May. At the same time, 54% of them still 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.
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