- Opened positions on Gold remain positive with a confident majority of bullish trades (68% bullish / 32% bearish)
- The closest resistance for the yellow metal it currently located at 1,225
- At the same time, the closest support for the bullion is placed at 1,215
- Upcoming events on March 3: Germany Retail Sales (Jan), Reserve Bank of Australia Interest Rate Decision and Rate Statement, Switzerland GDP (Q4), UK Construction PMI (Feb), Canada GDP (Q4)
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Gold reached a two-week high on Monday, supported by strong China's demand following an interest rate cut aimed at propping up the world's second biggest economy. Gold rebounded from the lowest level in seven weeks after Chinese buyers returned from the February 18-24 Lunar New Year holiday. The People's Bank of China announced a 25-basis-point cut on Saturday, in a fresh sign Beijing is becoming more decisive in underpinning flagging economic growth. Economists do not rule out another rate cut in the coming months.
Meanwhile, US economy rose more than expected in the fourth quarter, according to the preliminary data. Gross domestic product grew at a 2.2% annual pace, revised down from the 2.6% pace estimated last month, the Commerce Department reported. With consumer spending accelerating at its fastest pace since the first quarter of 2006 and strong gains in other measures of domestic demand, the slowdown in growth is seen to be temporary.
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RBA expected to cut main rate by additional 25 basis points
According to market expectations, the Reserve bank of Australia is preparing to slash its benchmark interest rate down 2% at its meeting tomorrow. Currently, the rate stays at 2.25%, while a potential decrease by 25 basis points will mean a second consecutive cut in two months of the RBA. Besides that, important Gold drivers on March 3 will include the gross domestic product data for the fourth quarter of 2014 from Switzerland and Canada.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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It seems that a major round level of 1,200 succeeded in providing Gold with considerable bullish momentum. The precious metal surged above 1,210 back on Friday of the last week and continued to increase further in the morning on Monday. At the moment of writing the metal is trading just above 1,220 level, which is strengthened by 20-day SMA and weekly R1 from above. Therefore, bullish development will soon meet a significant resistance area. Moreover, daily technical indicators still prefer a strong bearish case for Gold in the short term.
Hourly chart
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SWFX opened positions stay on positive side
Meanwhile, OANDA's bulls continue to enjoy a firm majority as their share of total opened trades stays at 65% at the moment. Meanwhile, Gold's sentiment is remaining the fifth most positive among major currency pairs at OANDA. In addition, SaxoGroup market participants are also optimistic with respect to the yellow metal, as there are 64% of bullish positions registered by 6:30 GMT today.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Feb 2 and Mar 2 expect, on average, to see Gold trading just below 1,250 by the end of May. At the same time, 50% of them still believe the bullion will be strongly above this mark in three months, while 30% of traders surveyed forecast the bullion to trade in the range between 1,100 and 1,250.
© Dukascopy Bank SA