- Bulls take up 71% of the market
- The upper edge of the emerging symmetrical triangle is at 1,230
- Near-term objective is 1,210
- Economic events: US Crude Oil Inventories, New Home Sales (Jan), Flash Services PMI (Feb)
US consumer confidence declined in February as households grew more worried about the outlook for the economy and jobs, sending their inflation outlook to the lowest level in nine years. The Conference Board's sentiment index dropped to 92.2 this month, hitting the weakest since July, down from a revised 97.8 in January. The gauge measuring current conditions slid to 112.1, compared with 116.6 in January. The share of people saying that jobs were plentiful slipped to 22.1% from 23%, while the proportion of Americans viewing business conditions as unfavourable climbed to 19.8% from 18.8%. The measure of consumer expectations for the next six months slumped to 78.9, the lowest level since February 2014, from 85.3 in a month earlier. Respondents' inflation expectations over the next 12 months fell to 4.7%, the lowest since February 2007, from 4.8%.
A separate report showed US home resales unexpectedly increased in January, hitting the highest level in six months, adding to signs that the world's number one economy remains on firmer footing despite slowing global growth and tightening financial market conditions. According to the National Association of Realtors, existing home sales climbed 0.4% to an annual rate of 5.47 million units, while January's figure was also the second highest since 2007. US home resales were up 11% from a year ago, the largest annual gain since July 2013.
Gold to depend on oil and US data
Given the increasing importance of fluctuations in oil prices, we should be wary of the change in the US commercial crude oil inventories to be released at 03:30 pm GMT, which stood at 2.1M a week ago. This may well impact the sentiment in the market, which in turn determines direction of gold. Additional volatility could be due to the new home sales report. According to the estimates, 522K of new single-family homes were sold during January after 544K reported a month ago.
Gold is bullish
The precious metal is well-positioned to resume its January and early February rally. While there could be a small sell-off in the near term, as long as 1,211/10 (up-trend and monthly R3) is intact, our target will be the February high at 1,264. Alternatively, should the bears push the price under 1,211/10, as suggested by the monthly technical indicators, this will not automatically invalidate the overall positive outlook, since there is also a strong demand area circa 1,190 dollars, represented by the recently violated three-year-old falling trend-line.Daily chart
The hourly chart suggests that the price is a lot more likely to fall than to rise today. XAU/USD is currently probing the upper edge of the emerging symmetrical triangle at 1,230, which implies a $20 sell-off during the next one-two days.
Hourly chart
No consensus
OANDA and Saxo Bank traders have an almost diametrically opposite opinion regarding gold. At the time of writing, 58% of positions open at the Canadian broker are long. As for the Saxo Bank, traders there are a little less bullish, as 55% are long the bullion.