- Opened positions on gold are strongly bullish (74% long / 26% short)
- The immediate resistance for the yellow metal is currently located at 1,106
- At the same time, the nearby support for the bullion is placed at 1,088
- Important economic events to follow in the next 24 hours: Spain Unemployment Rate (Q2), US Unemployment Claims (Jul 17), Euro zone Consumer Confidence (Jul), UK Retail Sales (Jun), Canada Retail Sales (May)
Gold remained stuck near the lowest level in five years on Thursday, with no solid recovery in sight. Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, declined further on Wednesday to the lowest level since 2008, as outflows continued from the previous week. The precious metal was also pressured by robust housing data from the US. Home resales surged to the highest level in more than eight years in June, rising 3.2% to a seasonally adjusted annual rate of 5.49 million in the reported month, whereas economists had predicted a 5.4 million annual rate.
Meanwhile, Reserve Bank of New Zealand cut interest rates for the second time in six weeks and hinted further easing will likely be needed to underpin inflation as growth slows. Central bank Governor Graeme Wheeler is trying to stoke inflation from near zero to 2% goal as plunging dairy prices curtail export returns and farmer spending. Thus, economists now expect the RBNZ to proceed with cutting the official cash rate in the near term to help jumpstart consumer inflation while cushioning the nation's economy from a precipitous decline in dairy prices, New Zealand's main export.
Upcoming fundamentals: UK June retail sales to confirm strong Q2 GDP outlook
In case UK retail sales grow in line with expectations in June, namely by 0.3% on a monthly basis, they will noticeably contribute to the overall GDP picture in the second quarter of this year, as consumer spending accounts for about 70% of economic activity. This statistics is awaited on Thursday by 8:30 AM GMT. Meanwhile, retail trade has most probably improved in Canada as well, while the average forecast suggests the sales rose 0.5% in May for the headline reading and climbed 0.8% on the core basis. Data from North America is due at 12:30 PM GMT.XAU/USD long-term outlook
Since the second quarter of 2013, the bullion has developed inside the falling wedge pattern, meaning that trading range was decreasing as time went on. Two pattern's boundaries were represented by the upper trend-line around 1,270 and pattern's support at 1,110. However, the lower edge has been crossed in the middle of July 2015 and gold consolidated below this crucial level. Therefore, any rallies are quite unlikely in the medium-term and the precious metal will remain under pressure from both the trend-line at 1,110 and the 2014 low around 1,131. The probability of a continuous retreat has therefore increased considerably, which is fuelled by strength of the US Dollar. Long-term bears are currently concentrating on the five-year low at 1,044, which is immediately followed by the 2008 high at 1,031.Daily chart
XAU/USD short-term outlook
The precious metal is trading in the mixed environment for a third consecutive day on Thursday, after a substantial drop took place back three days ago. It seems that gold is largely undecided on its short-term development. A decline below 1,088 (weekly S3) may trigger a sell-off down to the 2010 low at 1,044, as there are no technical levels to support gold this week any more. On the other hand, any possible gains of the bullion will be capped by resistances' cluster around 1,110. Therefore, the near-term outlook is cautious and focuses on the sideways development.Hourly chart
SWFX sentiment strongly bullish towards gold
In the meantime, OANDA's bulls are in the safe majority with 66.14% of all current positions. XAU/USD's sentiment there is currently the fourth most positive among all main crosses. Saxo Bank market participants are also optimistic towards the precious metal at the moment, as there are 73% of bullish trades registered on July 23.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jun 23 and Jul 23 expect, on average, to see Gold trading just below 1,150 by the end of October. At the same time, 46% of them believe the bullion will be strongly above this mark in three months, while 40% of traders surveyed forecast the bullion to trade in the range between 1,000 and 1,150.