- SWFX traders are 52% bearish
- 61% of pending orders in 1000-pip range are set to BUY gold
- Metal tests resistance just below 1,350.00
- All attention on stocks
The yellow metal seems to be the only asset not affected by the panic occurring this week in the markets. However, it is highly possible that a lot of the market participants, which are selling their equities, will buy gold as a hedge. That will propel the metal's price higher.
Economic activity in the US services sector was the strongest in more than 12 years, supported by rising new orders, suggesting that the economy sustained the strong momentum in the beginning of the year. The ISM survey showed that its non-manufacturing PMI jumped to 59.9 in January, from 55.9 in the prior month.
The US economy kept expanding even before the stimulus from a $1.5T tax cut program has begun to filter through. However, that is likely to cause some concerns that the country's economy could overheat.
No releases, watch equity markets
There are no data releases scheduled for Tuesday. However, nobody would be watching them even if they were.
The reason for that is the massive sell off occurring in the global stock market. Due to that reason all the big players are involved in that, and there will be no large fluctuations in the currency markets associated with the release of fundamental data.
XAU/USD stranded between SMAs
After testing the bottom boundary of a two-month ascending channel late on Friday, Gold accelerated against the US Dollar, thus dashing through several important resistance areas, including the weekly PP and the 55– and 100-hour SMAs.
On Tuesday morning, the rate was testing the upper boundary of a short term channel and the 200-hour SMA circa 1,345.10.
Technical indicators demonstrate that some upside potential still exists in the near term. In addition, the current positioning of the pair suggests that the junior channel should surrender under the bullish pressure, thus allowing the rate to breach the 200-hour SMA and the weekly R1 and approach its six-month high of 1,365.00.
However, given the strength of the nearest resistance, the pair might consolidate for some time.
Hourly Chart
The previously not confirmed long term ascending channel pattern has been confirmed.
Namely, the commodity price bounced off its lower trend line exactly, where the speculated support was drawn.
Daily Chart
Market sentiment on the bearish side
SWFX market sentiment is bearish on Gold, as 52% of open positions are short. However, 52% of pending commands are set to sell the commodity.
OANDA traders are bearish, as 57% of open positions are short. In the meantime, SAXO bank traders are 53% bearish.