- Opened positions on gold are strongly bullish (71% long / 29% short)
- The closest resistance for the yellow metal is currently located at 1,192
- At the same time, the closest support for the bullion is placed at 1,186
- Upcoming events on June 19: Germany PPI (May), ECOFIN Meeting, Bank of Japan Monetary Policy Statement, UK Public Sector Net Borrowing (May), Canada CPI (May) and Retail Sales (Apr)
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Gold continued to climb on Thursday as the US Dollar came under pressure following the Fed's statement that the US central bank may raise rates later than markets had expected and revised downwards its growth outlook. Despite a slightly gloomier forecasts, the Fed remains on track to lift interest rates once or twice over its four remaining monetary policy meetings this year. A weaker US Dollar tends to boost Dollar-denominated gold, while lower rates also support non-interest-paying precious metal.
Meanwhile, New Zealand's economy slowed considerably in the first quarter of the year as drought hurt farming, diminishing dairy output, while low prices hit oil production and exploration, leaving the Reserve Bank of New Zealand with room for further monetary policy easing. The nation's economy grew a seasonally adjusted 0.2% in the three months through March, marking the lowest quarterly rate in two years, against economists and the central bank's forecast of 0.6%.
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Canadian CPI and retail data in focus on Friday
Tomorrow, the Bank of Canada will release the consumer price index for the country in May, which will be published along with the same indicator from Statistics Canada. Even though there are different methods of calculating inflation, they both are expected to jump on the monthly basis, while staying broadly unchanged at 0.8% (2.1% for the core reading) on the annual basis.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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Despite initial losses in the beginning of Wednesday, gold erased them by the end of the trading and even managed to bounce off the 2013 low at 1,180. Moreover, the post-FOMC reaction is in place on Thursday, and currently XAU/USD is testing the 20-day SMA at 1,186, while setting eyes on the next resistance at 1,192 (weekly R1). At the same time, the area between 1,192 and 1,206 is full of different technical levels; therefore, the bullion is likely to fail growing considerably without any major bullish impetus.
Hourly chart
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Read More: Technical Analysis
SWFX long opened positions on gold above 70%
Meanwhile, OANDA's bulls are in the safe majority with 71% (-3%) 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 61% (-4%) of bullish trades registered by 5:30 AM GMT on June 18.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between May 18 and Jun 18 expect, on average, to see Gold trading around 1,185 by the end of September. At the same time, 49% of them believe the bullion will be above 1,200 in three months, while 31% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
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