- Opened positions on Gold remain positive (74% bullish / 26% bearish)
- The closest resistance for the yellow metal is currently located at 1,173
- At the same time, the closest support for the bullion is placed at 1,160
- Upcoming events on March 20: Euro zone current account (Jan), UK Public Sector Net Borrowing (Feb), Canada CPI (Feb) and Retail Sales (Jan)
© Dukascopy Bank SA
The Federal Reserve has eventually dropped its previous patient stance towards an increase of the federal funds rate. Yesterday, following the FOMC monetary policy meeting, the regulator's chair Janet Yellen indicated that the central bank is almost ready to begin raising interest rates.
However, the pace of hike will be slower than initially estimated. For now, the median forecast for the federal funds rate at the end of 2015 stays at 0.625%, down from 1.125% forecasted back in December of the previous year. At the same time, the probability of a hike as soon as June increased considerably. Besides that, Yellen underlined that any movements during the next FOMC meeting in April are still unlikely.
Watch More: Dukascopy TV
Canadian inflation to improve, retail sales expected to fall further
Tomorrow, Statistics Canada will release two important fundamental indicators that are estimated to have a significant impact on both foreign exchange and commodity markets. Retail sales in this country have probably deteriorated further in January, namely by 0.7% according to expectations. This result will follow a 2% drop during last month of 2014. On the other hand, stabilising oil prices are likely to have a positive effect on inflation indicator which is forecasted to stay at +0.7% for February (-0.2% in January).Read More: Fundamental Analysis
XAU/USD develops inside bearish channel on daily chart
On January 22, the level at 1,300 which acted as a strong supply for Gold forced the yellow metal to resume declining. Moreover, the bullion succeeded in consolidating below 1,200 during the first week of March, following a period of considerable losses. Taking into account strength of US fundamental factors and potential positive effects from the expanded asset purchases programme in the Eurozone, the long-term outlook for Gold is remaining fairly bearish. Even though some medium-term bullishness can be created by the 2014 low around 1,130, the precious metal is likely to develop below this level in course March-April time period. Moreover, in case of consolidation below this mark, a drop down to 2010 low at 1,044 will be broadly expected to take place towards the end of May.Daily chart
© Dukascopy Bank SA
Following more dovish than expected statement from the US Federal Reserve, Gold increased in price noticeably on Wednesday. The precious metal added around $20 per ounce and crossed the nearest resistance at 1,160 which is represented by the weekly PP. Moreover, the bullion attempted to breach the next supply zone at 1,173 (monthly S1; weekly R1), but failed eventually to accomplish this task. At the moment, markets may expect a bearish correction to take place, taking into account resistance areas at 1,180 and 1,188 that will limit Gold's growth with any attempt to cross them.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
SWFX opened positions remain positive
Meanwhile, OANDA's bulls continue to enjoy a firm majority as their share of total opened trades stays at 67.52% at the moment, giving a two percentage slump in course of past 24 hours. In addition, Gold's sentiment is currently the second most positive among major currency pairs at OANDA. In addition, SaxoGroup market participants are also positive with respect to the yellow metal, as there are 58% of bullish positions registered by 7:00 GMT on March 19.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Feb 19 and Mar 19 expect, on average, to see Gold trading just below 1,200 by the end of June. At the same time, 49% of them still believe the bullion will be strongly above this mark in three months, while 31% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
© Dukascopy Bank SA