- Opened positions on Gold remain positive (64% bullish / 36% bearish)
- The closest resistance for the yellow metal is currently located at 1,173
- At the same time, the closest support for the bullion is placed at 1,160
- Upcoming events on March 17: Euro zone CPI (Feb) and Employment Change (Q4), Germany Zew Economic Sentiment (Mar), US Housing Starts (Feb) and Building Permits (Feb), Bank of Japan Monetary Policy Statement, Japan Trade Balance (Feb)
Gold remained near its lowest level in three months hit last week ahead of the Fed's policy meeting this week, which may hint at timing of the first interest rate hike. The crucial two-day meeting begins on Tuesday, with investors' expectations growing that policy makers will announce a June rate increase given successive months of sturdy job market data. The US Dollar has already been supported by prospects of higher US rates, trading near a 12-year high versus a basket of major currencies. A stronger Dollar hurts bullion's safe-haven appeal, as it makes the precious metal more expensive for holders of other currencies.
US producer prices continued to decline in February, adding to signs of weak inflationary pressures in the world's number one economy. The producer-price index for final demand, which measures prices that businesses charge for their goods and services, dropped a seasonally adjusted 0.5% in February from the preceding month, the Labor Department reported. Stripping out the volatile food and energy categories, the index slid 0.5%.
Falling Japanese CPI unlikely to cause more actions from BoJ
In the night between Monday and Tuesday, the Bank of Japan will hold its scheduled monthly monetary policy meeting, where potential risks to inflation and its slowdown will be in the centre of discussion. At the same time, markets forecast no changes both to the main interest rate and amount of government bond purchases, meaning that the BoJ is possibly just going to underline the negative effect from falling oil prices on the consumer price index.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 1,200 during the first week of March, following a period of considerable losses. 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 the 2014 low around 1,130, the precious metal is likely to develop below this level in course March-April time period. Moreover, in case of consolidation below this mark, a drop down to 2010 low at 1,044 will be broadly expected to take place towards the end of May.Daily chart
Being supported by the 20-day SMA, the yellow metal managed to register its first increase in price in nine trading days on Friday. The bullion was pushed towards the 1,160 mark, while a rise continued on Monday with a breach of the weekly pivot point located on the same level. In case bulls manage to hold the current positive momentum, we should observe the bullion's jump up to the closest significant resistance area at 1,173 (weekly R1; monthly S1). On the other hand, a failure to sustain growth may result in a decline down to 1,145 (weekly S1).
Hourly chart
SWFX opened positions remain positive
Meanwhile, OANDA's bulls continue to enjoy a firm majority as their share of total opened trades stays at 70% at the moment, thus giving a rise of less than one percent from Friday. As a result, Gold's sentiment is currently the second most positive among major currency pairs at OANDA. In addition, SaxoGroup market participants are also positive with respect to the yellow metal, as there are 60% of bullish positions registered by 6:30 GMT on March 16.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Feb 16 and Mar 16 expect, on average, to see Gold trading around 1,200 by the end of June. At the same time, 52% of them still believe the bullion will be strongly above this mark in three months, while 29% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.