This week, the markets could move due to the testimony of the US Federal Reserve Chairman Jerome Powell's testimony before the US Congress. New information could move the US Dollar.
On Thursday, a data release could move the financial markets. The United States Bureau of Labor Statistics is set to release the US Consumer Price Index data sets at 12:30 GMT. Higher than expected inflation would indicate that the US Fed cannot cut interest rates. Lower inflation would signal that rate cuts are possible.
On Friday, more inflation data will be published. The US Producer Price Index data sets will reveal how prices have changed at the manufacturing level. Due to this release coming after the CPI, it is highly likely that the reaction will be minor.
XAU/USD short-term forecast
A resumption of the surge could find resistance in the 2,390.00/2,400.00 range. Above this range, the metal could aim at the all-time-high level at 2,450.00. Meanwhile, a surge is expected to be slowed down by round price levels like the 2,410.0, 2,425.00 and 2,440.00.
In the case of a decline of the commodity price, it could look for support in the 100-hour simple moving average, before reaching the 2,350.00 level.
XAU/USD daily charts review
Prior analysis: "On the daily candle chart, note the additional support from the approaching 100-day simple moving average near 2,300.00. In the meantime, the 50-day SMA appears to have turned into resistance. This situation could return into a squeeze that would be then followed by a sharp break-out move."The fundamental data has shown the direction by providing the needed strength to move the price above the 50-day simple moving average.
In the near term future, the metal will test the 2,400.00 and 2,450.00 levels. The moving averages could provide support to the potential move higher.
Daily Candle Chart
Traders add short positions
The week prior, traders were 59% short, as that proportion of all open position volume was in bearish positions.
In the meantime, pending orders in the 1000-point range around the current pair orders were 70% to sell.
On Thursday, trader positions were 65% short and pending orders were 60% to sell. As gold has moved higher, traders have added to their short positions.
By Monday, already 69% of traders were short, as they expected a decline. Meanwhile, pending orders are 55% to buy. It appears that no more short positions will be added.