- Opened positions on Gold remain bullish (61% long / 39% short)
- The closest resistance for the yellow metal is currently located at 1,194
- At the same time, the closest support for the bullion is placed at 1,182
- Upcoming events on June 1: China, France, Germany, Euro zone, UK and US Markit Manufacturing PMI (May), Germany Prelim CPI (May), US Personal Spending (Apr) and ISM Manufacturing PMI (May), Australia Building Approvals (Apr)
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Gold headed for a second consecutive weekly drop, trading near its lowest level in more than two weeks, amid prospects of higher interest rates in the US. The latest data showed contracts to purchase previously owned homes in the US increased for a fourth consecutive month in April to the highest level in nine years, buoying the outlook for the housing market. At the same time US initial jobless claims rose more than expected in the week ended 23 May. Trader's attention now turns to the second release of the US GDP data later today, which may show the US economy contracted 0.8% in the first quarter.
The number of Americans applying for unemployment benefits unexpectedly jumped last week, but remained at levels consistent with an improving labour market. Initial claims for unemployment aid increased 7,000 to a seasonally adjusted 282,000 for the week ended May 23, according to the Labor Department.
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US manufacturing PMI to provide insight into Q2 economic sentiment
At first, activity in the manufacturing sector of the United States will be published by Markit. Later, the same indicator will be released by the ISM. Last month both of them showed a moderate pace of activity's growth, while this month's data will demonstrate how the situation in the world's most powerful economy develops after weak Q1 GDP numbers. Despite all, a PMI's decline below the threshold of 50 points is assumed to be unlikely.Read More: Fundamental Analysis
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
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The precious metal has been trading flat for a second consecutive day on Thursday, while awaiting additional influencing factors. The bullion, however, made an attempt to slump below the weekly S2 at 1,182 yesterday, but was pushed back in the direction of 1,190. The metal is required to show more volatility in order to escape the narrow range between 1,182 and 1,194. An upward scenario seems more difficult at the moment, considering a dense cluster of immediate supply levels (monthly PP, 55-day SMA, weekly S1).
Hourly chart
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SWFX opened positions on gold are positive
However, OANDA's bulls continue to enjoy the stable majority with 72.17% of all current positions. Gold's sentiment at OANDA is the second most positive among all major currency pairs at the moment. Saxo Bank market participants are also optimistic with respect to the precious metal, as there are 64% of bullish trades registered by 5:30 AM GMT on May 29.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Apr 29 and May 29 expect, on average, to see Gold trading around 1,230 by the end of August. At the same time, 58% of them believe the bullion will be strongly above 1,200 in three months, while 29% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
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