- Opened positions on gold are bullish (66% long / 34% short)
- The closest resistance for the yellow metal is currently located at 1,179
- At the same time, the closest support for the bullion is placed at 1,162
- Upcoming events on June 9: Euro zone Revised GDP (Q1), China CPI (May), Australia Home Loans (Apr), Switzerland Unemployment Rate (May), UK Trade Balance (Apr), Japan Core Machinery Orders (Apr)
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Gold rose on Monday following a three-day losing streak, but was traded near the lowest level in 11 weeks as stronger US Dollar kept bullion well below a psychological level of $1,200 an ounce. The precious metal declined to $1,162 on Friday as data showed American employers added considerably more jobs in May than expected. The world's number one economy created 280,000 jobs last month, compared with economists' expectations for a 225,000 gain. In addition to that, further outflows were seen in SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, with holdings declined 0.17% to 708.70 tonnes on Friday, hitting the lowest level since mid-January.
Meanwhile, economic growth of Japan, the world's third biggest economy, was revised sharply to the upside in the first quarter, underscoring the Bank of Japan's belief that recovery from last year's recession is gaining steam. The economy expanded an annualised 3.9%, overshooting a preliminary estimate of a 2.4% gain, and beating a median market forecast for 2.7% growth.
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China's inflation to slow down further, UK trade deficit likely to narrow
The consumer price index in China is currently forecasted to show a decline from 1.5% to 1.3% on the annual basis in May, as the world's second most powerful economy struggles to gain the necessary growth momentum, which weighs on the inflation indicator as well. This data is due at 01:30 AM GMT on Tuesday. Meanwhile, the British trade gap is predicted to remain broadly unchanged in April around 10 billion pounds, while the official numbers are awaited by 8:30 AM 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 1,115. 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 1,210 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 precious metal slid for the third consecutive day last Friday and penetrated one of the most important supports, namely the May low at 1,169. Moreover, losses were extended down to the monthly S1 at 1,162, but this level managed to reverse gold and send it to the upside by the end of trading. At the moment daily technical studies are mixed; however, RSI and Stochastic are suggesting buying the metal. Meanwhile, the immediate resistance is located at 1,179 (weekly PP), followed by 20-day SMA at 1,190.
Hourly chart
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SWFX long opened positions on gold below 70%
Meanwhile, OANDA's bulls are in the safe majority with 72.90% 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 62% of bullish trades registered by 5:30 AM GMT on June 8, down eight percentage points during the weekend.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between May 8 and June 8 expect, on average, to see Gold trading around 1,225 by the end of September. At the same time, 60% of them believe the bullion will be even strongly above 1,200 in three months, while 26% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
© Dukascopy Bank SA