- Market sentiment is 53% short
- 71% of pending orders in 1000-pip range are set to SELL gold
- Stops at notable resistance level
- US data upcoming on Wednesday
The yellow metal's price on Tuesday reached a very important resistance level. Due to that reason we actually see the markets expecting new signals before they continue on. These signals might come in the form of fundamental data on Wednesday.
The US government posted a $49B budget surplus in the month of January, the Treasury Department stated on Monday. The report also showed that the US fiscal gap rose 11% to $175.7B in the four month period to January, compared to the same period a year ago.
The gap is anticipated to widen further as an aging population increases spending on retirement programs and healthcare. The proposed budget released on Monday revealed the deficit widening to $984B in 2019, assuming that Congress would adopt all of the President Trump's proposals, including cuts of spending.
Data on Wednesday
Look forwards to Wednesday. There will be a major data release occurring at 13:30 GMT in the US. Namely, the US CPI and US Retail Sales data sets and their associate data will be published at the same time.
The release is set to be covered by the Dukascopy Research team on the bank's live webinar platform. Tune in by clicking on the notification on the Dukascopy trading platforms. Or one can just google the Dukascopy webinars.
XAU/USD trades between SMAs
The yellow metal was stranded between the bounds of the 55– and 100-hour SMAs during the first part of Monday. A strong hourly surged mid-session allowed XAU/USD to breach the latter and move towards the 200-hour SMA and the upper boundary of a three-week channel down circa 1,330.00.
However, the pair's movement after breaching the line has been sideways, thus suggesting that it might not be able to overcome its nearest resistance.
In addition, the formation of a minor rising wedge should result in a southern breakout. This bearish move should not be long-lived, as the rate is supported by the 55– and 100-hour SMAs at 1,320.00.
Gold should subsequently edge higher and try to re-test the 1,330.00 area. Gains should be capped at the 23.60% Fibo and the monthly PP at 1,335.60.
Hourly Chart
The medium-term outlook points to a continuous decline. After hitting the 2017 high of 1,360.00, Gold is showing weakness against the Greenback.
It is likely that the current movement south prevails until the 55- and 100-day SMAs and the 23.60% Fibo retracement near the 1,300.00 mark is reached sometime this week.
Daily Chart
Market sentiment on the bearish side
SWFX market sentiment is currently standing at equilibrium, compared to 53% of open positions being short during the previous session. Meanwhile, 52% of pending commands are once again to buy the commodity (+2%).
OANDA traders are bearish, as 53% of open positions are short (-1%). Meanwhile, SAXO bank traders are still bullish with 51% long positions.