- Opened positions on Gold remain strongly positive (70% bullish / 30% bearish)
- The closest resistance for the yellow metal is currently located at 1,188
- At the same time, the closest support for the bullion is placed at 1,177
- Upcoming events on May 12: US Monthly Budget Statement (Apr), UK Manufacturing Production (Mar) and NIESR GDP Estimate (3M-Apr), RBNZ Financial Stability Report
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Gold retreated on Monday after the People's Bank of China cut interest rates on Sunday. The central bank has slashed rates for the third time in six months due to worse than expected economic slowdown and deflationary threat. The PBoC cut benchmark lending and deposit rates by a quarter of a percentage point to 5.10% and 2.25%, respectively.
In the week ahead, investors will be watching closely US retail sales data for April, JOLTS Job Openings report and initial jobless claims, for fresh hints on the strength of the world's number one economy and the timing of a US rate hike. Meanwhile, later today, Eurogroup gathers in Brussels for a key meeting on Greece, where an interim cash-for-reforms deal may be reached.
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UK industry to expand for second month in a row
In Britain, the manufacturing output is currently forecasted to reveal a 0.3% increase in March, following growth in February that amounted to 0.4% on a monthly basis. In case the data is released in line with predictions or better, markets will most likely look for an upward revision of the UK GDP with the second estimate.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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XAU/USD has been providing the market with no significant movements for a prolonged period of time. Now, the yellow metal has even formed a triangle pattern on the hourly chart, but the break-out is considered to take place soon. The bearish scenario seems more probable at the moment, taking into account a dense cluster of resistances around 1,190 which includes 55-day SMA and monthly PP. In addition to that, daily and monthly technical indicators are confidently pointing downwards.
Hourly chart
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Read More: Technical Analysis
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 69.83% 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 57% of bullish positions registered by 5:30am GMT on May 11.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Apr 11 and May 11 expect, on average, to see Gold trading around 1,200 by the end of August. At the same time, 54% of them still believe the bullion will be even above this mark in three months, while 27% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
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