- Opened positions on gold are strongly bullish (66% long / 34% short)
- The immediate resistance for the yellow metal is currently located at 1,171
- At the same time, the nearby support for the bullion is placed at 1,157
- Upcoming events in the next 24 hours: France Trade Balance (May) and Government Budget Balance (May), Eurogroup Meeting, Emergency Euro Summit in Brussels, US Trade Balance (May), UK Manufacturing Production (May) and NIESR GDP Estimate (3M-Jun), Canada Trade Balance (May)
Even though activity in the US non-manufacturing sector rose in June, it fell shy of economists' expectations. According to the Institute for Supply Management, non-manufacturing PMI came in at 56.0 in June, up from 55.7 a month earlier, which was the lowest level since April last year. Meanwhile, a separate report showed the US labour market was less strong in June suggesting the Fed might be less willing to begin hiking interest rates on September. The central bank's comprehensive gauge of employment conditions remained virtually flat at 0.8 points in the reported month, considerably below the 2 points economists had expected and following a downward revised 0.9 points in May.
Meanwhile, the Reserve Bank of Australia kept its official cash rate unchanged at 2.00%. While the rhetoric was largely unchanged, the RBA retains a soft easing bias. The central bank said the Australian economy continued to grow over the past year, albeit at a rate, which is below its long-term average. Overall, the economy is likely to perform with a degree of spare capacity for some time yet. In addition to that, given very slow growth in labour costs, inflation is seen to remain consistent with the target over the next one to two years, even with a lower exchange rate.
UK manufacturing to rebound in May, EU Emergency Summit begins in Brussels
Manufacturing production in Britain is estimated to have picked up 0.1% in May, following a surprising decline of 0.4% in the preceding month. At the same time, industrial production gauge, which includes mines and utilities, is projected to drop by 0.2% after a rise of 0.4% seen in April. This statistics is due at 8:30 AM GMT today. In the meantime, the National Institute of Economic and Social Research will publish its UK GDP estimate for the three months through June. The indicator will follow a quarterly GDP forecast of 0.6% seen in March-May.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, but the growth stalled beneath the 2009 high at 1,230. In the foreseeable future the rally is likely to be limited and the bullion should be driven by the 200-day SMA around 1,200, which has 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
XAU/USD was provided with bullish impetus in the early morning trading on Monday; however, gains were somewhat erased later during the day and gold slipped back below the 1,171 mark (weekly PP). There are no formidable supports until 1,157, where the lower Bollinger band coincides with the previous week's low. This level is extremely likely to become the medium-term target for bears. However, any following downward moves should be capped by the monthly/weekly S1 at 1,154.
Hourly chart
SWFX sentiment strongly bullish toward gold
Meanwhile, OANDA's bulls are in the safe majority with 80.74% of all current positions. Gold's sentiment at OANDA is the second most positive among all major crosses at the moment. Saxo Bank market participants are also optimistic with respect to the precious metal, as there were 69% of bullish trades registered by 5:30 AM GMT on July 7.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jun 7 and Jul 7 expect, on average, to see gold trading around 1,170 by the end of October. At the same time, 46% of them believe the bullion will be above 1,200 in three months, while 31% of traders surveyed forecast the precious metal to trade in the range between 1,050 and 1,200.