- Opened positions on Gold remain strongly positive (73% bullish / 27% bearish)
- The closest resistance for the yellow metal is currently located at 1,194
- At the same time, the closest support for the bullion is placed at 1,187
- Upcoming events on May 7: Germany Factory Orders (Mar), US Unemployment Claims (May 1), Australia Employment Change and Unemployment Rate (Apr), UK Parliamentary Election
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Gold climbed 1% on Tuesday as the US Dollar retreated, while global equities fell ahead of US non-farm payroll data later in the week, which is expected to provide clues as to when the Federal Reserve will hike interest rates. The recent US data fuelled speculation the Fed would not raise interest rates at its policy meeting in June, bolstering demand for the precious metal, a non-interest-paying asset. In addition to that, a number of other factors, including an increase in oil prices also supported demand for safe-haven bullion.
In the meantime, the US trade deficit ballooned in March to the highest level in six years, driven by a record increase in imports as commercial activity resumed at West Coast ports after a resolution to labour disputes. The gap increased 43.1%, the biggest jump in 18 years, to $51.4 billion, the largest since October 2008, the Commerce Department said. Exports rose 0.9% to $187.8 billion, while imports surged 7.7% to $239.2 billion.
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UK election's uncertainty expected to drive markets on May 7
Tomorrow, the United Kingdom is holding a General Election, which will return 650 MPs into the House of Commons. Considering the fact that this election is assumed to be the most uncertain in Britain's post-war history, markets are likely to monitor this event closely. Moreover, the most considerable reaction may take place after the closure of polling stations at 9:00pm GMT. Meanwhile, from the pure fundamental part, Australian employment growth is forecasted to slow down to just 5,000 in April. Moreover, the jobless rate is set to increase from 6.1% up to 6.2% for the same month.Read More: Fundamental Analysis
XAU/USD develops inside bearish wedge pattern on daily chart
Since the second quarter of 2013, the bullion has been developing inside the falling wedge pattern, meaning that trading range is decreasing as time goes on. In March 2014, however, the yellow metal resumed gaining value, even without touching the lower trend-line, at that time located around 1,150. Towards the end of June gains are likely to be limited and the bullion should be driven by the 200-day SMA around 1,220 with a slight bearish bias. Eventually, bears are forecasted to overtake a lead and drive the metal back to the south. The overall negative trend for Gold seems to be the case in the long-term future, while at the end of this year the precious metal is likely to consolidate around 1,150, if the present trend persists.Daily chart
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Gold traded on the upside during the trading session on Tuesday. Positive momentum was provided by the weekly PP at 1,187, even though the precious metal faced a dense cluster of resistances ahead of it. Despite that, there were several attempts to violate this area at 1,194, which is composed of 55-day SMA and monthly PP. Today XAU/USD is highly likely to try and push through this zone. In case bulls succeed, it will give them an opportunity to raise the price up to 100-day SMA (1,210) in the near-term. Otherwise, a bounce-back may extend as low as 2013 low at 1,180.
Hourly chart
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SWFX opened positions on Gold remain strongly positive
Meanwhile, OANDA's bulls continue to enjoy a stable majority, and their share of total opened positions reached 70% in the morning today. Gold's sentiment at OANDA is currently the second most positive among all major currency pairs. Saxo Bank market participants, from their side, are also optimistic with respect to the precious metal, as there are 59% of bullish positions registered by 5:30am GMT on May 6.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Apr 6 and May 6 expect, on average, to see Gold trading around 1,220 by the end of August. At the same time, 44% of them still believe the bullion will be above 1,250 in three months, while 35% of traders surveyed forecast the bullion to trade in the range between 1,100 and 1,250.
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