- Opened positions on Gold remain slightly bullish (51% long / 49% short)
- The closest resistance for the yellow metal is currently located at 1,209
- At the same time, the closest support for the bullion is placed at 1,203
- Upcoming events on May 22: Germany Final GDP (Q1) and IFO Business Climate (May), US CPI (Apr), ECB President Draghi Speech, Fed Chair Yellen Speech, Canada CPI (Apr)
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The bullion traded above the key $1,200 an ounce on Thursday as minutes from the Fed's policy meeting showed the central bank is unlikely to hike interest rates in June. The US economy's weakness in the beginning of the year persuaded most Fed policy makers that the economy would not show enough strength to justify hiking the benchmark interest rate in June.
The precious metal, a non-interest-bearing asset, is set to benefit from the Fed's decision to postpone rate increase. Meanwhile, SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, said its holdings declined 0.41%to 715.26 tonnes on Wednesday, falling to the lowest level in four months.
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Inflation data to be in focus on Friday
Tomorrow, both the United States and Canada are releasing the statistics on consumer prices for April of this year. The numbers will reveal, whether inflation is rebounding as a result of more expensive oil. Meanwhile, heads of the ECB, BoJ and BoE are going to speak tomorrow at the ECB Forum on Central Banking in Portugal.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. Two pattern's boundaries are represented by the upper trend-line around 1,270 and pattern's support at 1,120. Among recent developments, in March 2015 the yellow metal resumed gaining value, even without touching the lower trend-line. In the foreseeable future 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. Some short-term gains in the direction of the long-term downtrend (1,270) are not completely off the table, but bears are eventually going to overtake a lead and drive the metal back to the south. The overall negative tendency for Gold seems to be the case in the long run, while at the end of this year the precious metal should to consolidate around 1,150, in case the present trend persists.Daily chart
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On Wednesday, the yellow metal attempted to trade further down after major losses a day before. However, the bullion was stopped by immediate support at 1,203, which is represented by the 20-day SMA. This line reversed Gold back towards the weekly PP at 1,209. A confident confirmation below 1,194 (monthly PP) is needed in order to confirm the medium-term bearish expectations. On the other hand, an advance back above the cluster of resistances around 1,215 should energise bulls for additional purchases of the precious metal.
Hourly chart
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Read More: Technical Analysis
SWFX opened positions on Gold remain marginally positive
However, OANDA's bulls continue to enjoy a stable majority with 66.57% of all current positions, a further gain of about two percentage points on a daily basis. Gold's sentiment at OANDA is the fourth most positive among all major currency pairs at the moment. Saxo Bank market participants are also optimistic with respect to the precious metal, with 63% of bullish trades registered by 5:30 AM on May 21.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Apr 21 and May 21 expect, on average, to see Gold trading around 1,220 by the end of August. At the same time, 61% of them believe the bullion will be strongly above 1,200 in three months, while 22% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
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