- Opened positions on Gold remain strongly positive (74% bullish / 26% bearish)
- 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 1,187
- Upcoming events on May 8: Germany Trade Balance (Mar), US Non-Farm Payrolls and Unemployment Rate (Apr), China Trade Balance (Apr), Switzerland CPI (Apr), UK Trade Balance (Mar), Canada Net Change in Employment and Unemployment Rate (Apr)
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Gold remained under selling pressure on Thursday as higher bond yields undercut bullion's investment appeal. Bond yields in Europe and the US have been climbing as deflation fears have cooled with rebounding oil prices, and in anticipation of an interest rate increase by the Fed later this year. Investors' attention now turns to US labour market data tomorrow, following a dismal ADP's report earlier in the week. US private employers added 169,000 jobs last month, the fewest since January 2014 and considerably below economists' expectations.
In the meantime, Australian retailers reported weaker sales growth in March, justifying the RBA's latest decision to reduce interest rates to a new low in an attempt to boost demand. Australian retail sales climbed by a less-than-expected 0.3% in March from a month earlier, and by a lower-than-predicted 0.7% in the first quarter from the final three months of 2014. Economists had expected a 0.4% increase in March and 1.0% growth for the quarter.
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All eyes on US as Labour Department releases employment data
On the last working day of this week, all markets will be closely following data from the United States, where the Department of Labour will publish the payrolls data for April. Any significant deviation from mean expectations will most probably generate a noticeable reaction for Gold, which is usually turbulent towards this particular data release. Apart from the US, the similar labour market statistics will be announced in Canada. In the meantime, Germany, China and the UK are all going to publish their trade balances tomorrow.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. In March 2014, however, the yellow metal resumed gaining value, even without touching the lower trend-line, at that time located around 1,150. Towards the end of June 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. Eventually, bears are forecasted to overtake a lead and drive the metal back to the south. The overall negative trend for Gold seems to be the case in the long-term future, while at the end of this year the precious metal is likely to consolidate around 1,150, if the present trend persists.Daily chart
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Despite disappointing US fundamentals, the yellow metal remained unusually tranquil in terms of reaction to the data. From the technical point of view, there were attempts to violate the monthly PP at 1,194, but this resistance and the 20-day SMA managed to withstand bullish pressure. From another side, XAU/USD is currently supported by the weekly PP at 1,187, meaning that the cross seems to trade range bound at the moment. A closure beyond any of these two lines will provide Gold with an opportunity to show more pronounced development either to the upside or to the downside.
Hourly chart
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SWFX opened positions on Gold remain strongly positive
Meanwhile, OANDA's bulls continue to enjoy a stable majority, and their share of total opened positions reached 68.77% in the morning today. Gold's sentiment at OANDA is currently the second most positive among all major currency pairs. Saxo Bank market participants, from their side, are also optimistic with respect to the precious metal, as there are 62% of bullish positions registered by 5:30am GMT on May 7.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Apr 7 and May 7 expect, on average, to see Gold trading around 1,200 by the end of August. At the same time, 55% of them still believe the bullion will be above this mark in three months, while 26% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
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