- Opened positions on Gold remain bullish (55% long / 45% short)
- The closest resistance for the yellow metal is currently located at 1,193
- At the same time, the closest support for the bullion is placed at 1,177
- Upcoming events on June 3: Euro zone Services PMI (May), Retail Sales (Apr) and Unemployment Rate (May), ECB Interest Rate Decision, Monetary Policy Statement and Press Conference, US Services PMI (May) and ADP Non-Farm Employment Change (May) and Trade Balance (May), UK Services PMI (May), Australia GDP (Q1), Canada Trade Balance (May)
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Gold slid further below the key $1,200 an ounce on Tuesday as the US Dollar rose to the highest level in more than 12 years versus the Japanese Yen, while upbeat US economic data fuelled expectations for a Fed rate hike later this year. The yellow metal initially gained in the previous trading session after US consumer spending growth unexpectedly remained flat in April, but gave up those gains after a separate report from ISM showed manufacturing activity rose in May for the first time in seven months, while construction spending soared in April to close to the highest level in more than six years.
Meanwhile, the Reserve Bank of Australia decided to keep interest rates unchanged, in line with analysts' expectations, opting to hold rather than risk further fuelling house price inflation in Sydney. The RBA cut rates in May, referring to sluggish business investment and slowing Chinese growth, following an earlier cut from 2.5% to 2.25% in February. Yet, economists predict a further rate cut could be on the table in the central bank's August meeting.
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Important fundamentals to drive gold on Wednesday
At first, Australia will publish its GDP numbers for the first three months of 2015, and this statistics is awaited by 01:30 AM GMT. The European session will be focused on the ECB meeting and its interest rate decision at 11:45 AM GMT, while other fundamentals from the single currency bloc include retail sales and unemployment rate at 09:00 AM GMT. In the United States, markets estimate a significant improvement in trade and employment numbers for May, with this data to be published just after the midday GMT.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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The yellow metal traded in the turbulent environment in course of the trading session on Monday. Initially, the bullion managed to climb above the 1,195 supply area and even surpassed the 1,200 mark to reach its daily high at 1,204. However, US fundamentals provided the Greenback with bullish impetus, and gold fell back to 1,190 by the end of daily trading. A failure to consolidate above the resistance zone may signal about lack of bullish strength under existing fundamental conditions. Moreover, judging from weekly and monthly technical studies, the metal is likely to resume losing value in the medium-term perspective.
Hourly chart
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Read More: Technical Analysis
SWFX opened positions on gold are positive
However, OANDA's bulls are in the stable majority with 72.65% 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, as there were 63% of bullish trades registered by 5:30 AM GMT on June 2.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between May 2 and Jun 2 expect, on average, to see Gold trading around 1,215 by the end of August. At the same time, 55% of them believe the bullion will be strongly above 1,200 in three months, while 29% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
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