- Percentage of short positions has grown from 71 to 74%
- Gold left the boundaries of the symmetrical triangle
- One-two week objective is the 2015 high at 1,307
- Economic events: US Unemployment Claims, (Core) Durable Goods Orders (Jan)
The Fed policy makers remain divided on future interest rate hikes. Jeffrey Lacker, Richmond Fed President, said that the US central bank still has room to lift rates further in the coming months, as there are no signs that recession is imminent. Even though inflation remains below the Fed's 2% target, inflation indicators suggest a possible move back toward the goal over the medium term, Lacker said. The official added that economic analysis indicates that inflation could average 1.9% in the period between 5 years to 10 years from now. Yet, Lacker is not a voting member this year. Moreover, the new head of Minneapolis Fed, Neel Kashkari, said that he is optimistic about the US economy, which continues to grow moderately as the year progresses, adding that he sees both upside and downside risks to the growth outlook. Meanwhile, Robert Kaplan, Dallas Fed President, said that he does not expect the US economy to enter recession this year. Kaplan is among Fed officials advocating a patient and cautious approach to policy normalization given the global headwinds.
At the same time, St. Louise Fed President, James Bullard, reiterated his opposition to further interest rate increases amid a decline in US inflation expectations, which threatens the Fed's credibility. Investors are now expecting a price measure of less than 1.5%.
Claims and orders to grow
Today's releases are expected to be mixed for the US Dollar. While the initial jobless claims are estimated to rise by 8 thousand to 270K, the core durable goods orders are to grow 0.2% after contracting 1.2% a month earlier.
Gold headed towards February high
The commodity keeps appreciating after establishing a strong base at 1,210 dollars (up-trend and monthly R3). The objective is now 1,264, namely this month's current maximum. In case the bulls remain in control of the market after probing this resistance, the next objective could be already as high as 1,307, which is the highest level seen last year. The majority of the technical indicators, however, is against a prolonged recovery—four out of eight are giving ‘sell' signals, while only one is bullish and the rest are neutral.Daily chart
In the lower time frame gold left the boundaries of the symmetrical triangle, which is a strong 'buy' signal. Considering the height of the broken pattern (about 80 dollars), our objective is now the 2015 high at 1,307.
Hourly chart
Bullion is oversold in SWFX
The sentiment, as reported by OANDA and Saxo Bank, is from neutral to bullish. In the first case, 56% (58% yesterday) of currently open positions are long. In the second case, 49% (55% yesterday) of open positions are long.