XAU/USD is unchanged below weekly PP

Source: Dukascopy Bank SA
  • Opened positions on Gold remain slightly bullish (52% long / 48% 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 25: Japan Trade Balance (Mar), New Zealand Trade Balance (Apr)

© Dukascopy Bank SA
On Thursday, Gold retreated by 0.41% and was the only daily under-performer. Other commodities surged quite considerably, while oil climbed by more than 2%, corn gained 1.39% and natural gas advanced by 1.17% yesterday.

Gold remained above $1,200 an ounce on Friday, but was poised for its sharpest weekly drop in four weeks as the US Dollar rebounded, undermining the precious metal's safe-haven appeal. The metal is down 1.4% for the week so far, the biggest decline since the week ended April 24. The Greenback rose over 2% versus a basket of major currencies this week, ending a five-week losing streak, despite some losses on Thursday.

The US currency was supported by weakness in the Euro, which fell after the ECB hinted it would accelerate the pace of money printing to buy government bonds over the next two months. The Dollar was also boosted by some signs of economic recovery, despite the Fed saying it was unlikely to lift rates at its June policy meeting.

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New Zealand, Japan to release trade data on Monday

In the night between Sunday and Monday, Japan will publish the trade balance statistics for March, which is going to follow exceptionally positive numbers from February, when the country posted a trade surplus of 229.3 billion yen. Meanwhile, the same statistics will be revealed by New Zealand's authorities in the night between Monday and Tuesday.


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
© Dukascopy Bank SA

Yesterday, the bullion registered no substantial price movements. The key resistance zone remains in place around 1,210. This cluster of supply levels is represented by 100 and 200-day SMAs, weekly PP and monthly R1. The near-term outlook will stay bearish, unless Gold penetrates all of the mentioned resistances, which seems to be possible from the point of view of strongly positive daily technical indicators. Nevertheless, bears are currently focusing on driving the XAU/USD cross down to the monthly PP at 1,194.

Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis

SWFX opened positions on Gold remain marginally positive

Advantage of bulls over bears at the SWFX market is remaining extremely small, while the gap between them amounts to just four percentage points at the moment. The total share of bulls stays at 52% versus 48% for bears.

However, OANDA's bulls continue to enjoy a stable majority with 68.54% of all current positions. Gold's sentiment at OANDA is the third most positive among all major currency pairs at the moment. Saxo Bank market participants are also optimistic with respect to the precious metal, with 65% of bullish trades registered by 5:30 AM on May 22.













Spreads (avg,pip) / Trading volume / Volatility



Traders, who were asked regarding their longer-term views on XAU/USD between Apr 22 and May 22 expect, on average, to see Gold trading around 1,220 by the end of August. At the same time, 57% of them believe the bullion will be strongly above 1,200 in three months, while 23% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
© Dukascopy Bank SA

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