- Opened positions on gold are strongly bullish (71% long / 29% short)
- The closest resistance for the yellow metal is currently located at 1,180
- At the same time, the closest support for the bullion is placed at 1,169
- Upcoming events on June 18: Eurogroup Meeting in Luxembourg, ECB Economic Bulletin, ECB Targeted LTRO, US Unemployment Claims (Jun 12) and CPI (May), UK Retail Sales (May), Switzerland Trade Balance (May), Swiss National Bank Interest Rate Decision, China Foreign Direct Investment (May)
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Gold hovered near $1,180 an ounce on Wednesday as investors awaited Fed's monetary policy statement for hints on the timing of US interest rate hike. Following a two-day meeting, the US central bank will also release its latest forecasts for economic growth, which might be nudged lower. Any upside potential of bullion has been limited by the uncertainty over the timing of interest rate hike in the world's number one economy, which would reduce demand for non-interest-paying assets. Meanwhile, the ongoing Greek debt crisis is not spurring much safe-haven demand.
Meanwhile, US housing starts declined in May following a hefty increase the preceding month. However, a surge in building permits to a near the highest level in eight years suggested the pullback was temporary and indicated underlying strength in housing. Construction started on new homes plunged 11.1% to an annual rate of 1.04 million in May, following an upwardly revised April's figure of 1.17 million-unit rate, the highest since November 2007.
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SNB expected to maintain negative rates
The Swiss National Bank will make an interest rate decision on Thursday, but no changes to the monetary policy stance are currently expected. The decision will be made by 7:30 AM GMT, and the key rate will most probably stay at -0.75%, as the SNB is still accessing the full impact from negative rates on the economy, which declined 0.2% in the first quarter. In the meantime, UK retail sales are estimated to have been fully unchanged in May, following a surge of 1.2% back in April. These numbers are due tomorrow at 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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XAU/USD remains in the vicinity of the major technical level, represented by the 2013 low at 1,183, which in turn is strengthened by the weekly pivot point from above. Yesterday, all efforts to plunge below them were unsuccessful; however, the Fed decision on Thursday can drive the metal unexpectedly strongly in either direction. Daily technical studies are giving signals to sell gold in the short-term. The closest support will then be located as far as 1,169 (weekly S1); therefore, the precious metal has room for the bearish movement.
Hourly chart
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SWFX long opened positions on gold above 70%
Meanwhile, OANDA's bulls are in the safe majority with 74% of all current positions. Gold's sentiment at OANDA is the second 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 65% (+4%) of bullish trades registered by 5:30 AM GMT on June 17.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between May 17 and Jun 17 expect, on average, to see Gold trading around 1,200 by the end of September. At the same time, 54% of them believe the bullion will be even strongly above this level 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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