- Opened positions on Gold remain slightly bullish (52% long / 48% short)
- The closest resistance for the yellow metal is currently located at 1,209
- At the same time, the closest support for the bullion is placed at 1,202
- Upcoming events on May 21: China, France, Germany and Euro zone Manufacturing/Services PMI (May), ECB Monetary Policy Meeting Accounts, ECB President Draghi Speech, US Unemployment Claims (May 15) and Philadelphia Fed Manufacturing Survey (May), UK Retail Sales (Apr)
After a sharp overnight decline spurred by a stronger US dollar and equity market, gold struggled near its one-week low on Wednesday. All eyes now turn to the today's release of FOMC meeting minutes for clues on the US interest rate outlook. The precious metal lost 1.5% in the previous session, ending a five-day rally. Demand for gold declined as the Greenback rose to the highest level in two weeks versus a basket of major currencies, with the Euro plunging on news the ECB was considering to boost money printing to buy government bonds over the next two months. The US Dollar was also supported by better-than-expected US housing data that stoked hopes the Fed could hike rates soon.
Meanwhile, Japan's economy expanded 2.4% in the March quarter compared with the previous three-month period. In the final quarter of 2014, the economy expanded 1.5% following contraction in the preceding two quarters. On a quarterly basis, Japan's GDP grew 0.6% in the beginning of the year, compared with the market's median estimate of 0.4%.
UK retail sales to add 0.4% in April after drop in the previous month
The UK Office for National Statistics will release the retail sales data for April tomorrow. The indicator is assumed to grow by 0.4% on a monthly basis, following a 0.5% decrease in March. In addition to that, data from the US is expected to be mixed, with jobless claims rising slightly and Philadelphia Fed manufacturing index picking up marginally.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 1,120. Among recent developments, in March 2015 the yellow metal resumed gaining value, even without touching the lower trend-line. In the foreseeable future gains are likely to be limited and the bullion should be driven by the 200-day SMA around 1,220 with 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
Stronger US Dollar forced the yellow metal to plunge considerably on Tuesday. Sell-offs continued until the XAU/USD cross pierced through the dense demand zone around 1,210. Both 100-day SMA and monthly R1 were eliminated, meaning that attention will now turn to the near-term bearish scenario. A short-term failure to revive strength and return at least above 1,215 is expected to fuel bears for additional movements to the downside. The current target for them stays at 1,194 (monthly PP), with the possibility to bounce back from this mark in the medium-term.
Hourly chart
SWFX opened positions on Gold remain marginally positive
However, OANDA's bulls continue to enjoy a stable majority with 64.80% of all current positions, a gain of about four percentage points on a daily basis. Gold's sentiment at OANDA is the fourth most positive among all major currency pairs at the moment. Saxo Bank market participants are also optimistic with respect to the precious metal, with 59% of bullish trades registered by 5:30 AM on May 20.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Apr 20 and May 20 expect, on average, to see Gold trading around 1,220 by the end of August. At the same time, 62% of them believe the bullion will be strongly above 1,200 k in three months, while 20% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.