- Opened positions on gold are strongly bullish (74% long / 26% short)
- The immediate resistance for the yellow metal is currently located at 1,148
- At the same time, the nearby support for the bullion is placed at 1,140
- Important economic events to follow in the next 24 hours: US CPI (Jun) and Housing Starts/Building Permits (May), Reuters/Michigan US Consumer Sentiment Index (Jul), Canada CPI (Jun)
Gold continued to trade lower, languishing near its eight-month low on Friday and was set for a fourth week of declines, pressured by a strong Dollar. Bullion was hit this week after Fed Chair Janet Yellen said the US central bank is on track to hike interest rates this year if the world's number one economy continued to expand in line with policymakers' expectations, sending the Greenback the highest level in seven weeks against a basket of currencies on Thursday.
Meanwhile, the number of Americans who applied for unemployment benefits declined in the week ended July 11, coming in slightly better than expected. Initially jobless claims across the US economy fell to a seasonally adjusted 281,000 last week, down from a revised 296,000 reported in the previous seven-day period. It also marked the 19th consecutive month that claims remained below the 300,000 threshold, indicating improving labour market conditions. The four-week moving average of claims, a better measure of labour market trends as it strips out weekly volatility, rose 3,250 to 282,000 last week.
Inflation data in US, Canada in focus on Friday
The consumer price index in Canada is currently predicted to show a mixed development, when measured on monthly and yearly bases. Still, the same inflation reading in the US is forecasted to pick up in June. Both indicators are released today at 12:30 PM GMT. They are the most important data publications in the next 24 hours, as Europe and Asia will remain broadly silent in economic calendar terms on Friday.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 1,115. Among recent developments, in March 2015 the yellow metal resumed gaining value, even without touching the lower trend-line, but the growth stalled beneath the 2009 high at 1,230. In the foreseeable future the rally is likely to be limited and the bullion should be driven by the 200-day SMA around 1,200, which has 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
Gold depreciated for a fourth day in a row Thursday, and losses are estimated to be prolonged today as well. Therefore, the precious metal is heading for a fourth weekly drop in value. Despite a need for recovery, the short-term outlook is darkened by closeness of a tough support area, which is the main target for bears at the moment. The nearest technical level is represented by the March low at 1,143, followed by the previous year's low at 1,131. Alongside, any gains are most likely going to be rejected by the monthly S1 at 1,154.
Hourly chart
SWFX sentiment strongly bullish toward gold
Meanwhile, OANDA's bulls are in the safe majority with 79.63% of all current positions. Gold's sentiment there is the second most positive among all major crosses at the moment. Saxo Bank market participants are also optimistic towards the precious metal, as there are 72% of bullish trades registered in the morning on July 17.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jun 17 and Jul 17 expect, on average, to see Gold trading just below 1,180 by the end of October. At the same time, 56% of them still believe the bullion will be strongly above 1,150 in three months, while 33% of traders surveyed forecast the bullion to trade in the range between 1,000 and 1,150.