- Opened positions on Gold remain bullish (62% long / 38% short)
- 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 1,182
- Upcoming events on May 29: Germany Retail Sales (Apr), Italy GDP (Q1), Euro zone Money Supply (Apr), US Prelim GDP (Q1), Switzerland KOF Economic Barometer (May), Canada GDP (Mar)
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The bullion hovered near its lowest level in two weeks on Thursday, as a strong Dollar and prospects of higher interest rates in the US this year weighed on the demand for the precious metal. Traders will be eyeing data on US weekly unemployment claims and pending home sales for further clues of the world's number one economy's strength. Across the Atlantic, the Greek debt crisis remained the major issue for gold traders, worsening of which could spur safe-haven demand.
Meanwhile, the Bank of Canada maintained its target for the overnight rate at 0.75% for a third consecutive meeting, underscoring that growth and inflation are in line with expectations. Most economists now expect the bank to hold the line on interest rates for a while unless economic conditions deteriorate significantly. Consumer inflation is near the bottom of the central bank's 1%-3% target range, largely due to the transitory effects of considerably lower energy prices.
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American data to be closely watched on Friday
Despite a number of important data releases from different European countries and Canada, all eyes will be turned to the US tomorrow. The second-estimate GDP will be published by the Bureau of Economic Analysis, while economists suggest the world's most powerful economy failed to grow in the Q1 and expect a 0.8-0.9% annualised drop. In the meantime, the revised Q1 GDP data will be announced by Italy, and it will be followed by March economic growth statistics from Canada.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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It seems that market decided to limit the bullion's movements on Wednesday, following a sharp decline a day before. The XAU/USD cross made no single attempt to plummet below the weekly S2 at 1,182 or grow back above the resistance area at 1,194. The metal is likely to wait for additional drivers at the end of the week and will stay broadly unchanged on Thursday. Nevertheless, any close beyond the mentioned supply or demand zones may provoke substantial gains or losses, respectively. The short-term technical studies are bullish, with four of them giving signals to buy the precious metal.
Hourly chart
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SWFX opened positions on gold are positive
However, OANDA's bulls continue to enjoy the stable majority with 70.63% of all current positions, a slight 0.13% decrease from Wednesday. 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, as there are 64% of bullish trades registered by 5:30 AM on May 28.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Apr 28 and May 28 expect, on average, to see Gold trading around 1,230 by the end of August. At the same time, 60% of them believe the bullion will be strongly above 1,200 in three months, while 28% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
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