- Opened positions on Gold remain positive with a confident majority of bullish trades (62% bullish / 38% bearish)
- The closest resistance for the yellow metal it currently located just below 1,212
- At the same time, the closest support for the bullion is placed at 1,198
- Upcoming events on February 25: Italy Trade Balance (Jan), ECB President Mario Draghi's Speech in Brussels, Federal Reserve Chair Janet Yellen's Speech in US Congress (Day 2), US New Home Sales (Jan), Switzerland UBS Consumption Indicator (Jan), UK BBA Mortgage Approvals (Jan), New Zealand Trade Balance (Jan)
Still, Gold traded near the lowest level in seven weeks on Tuesday as investors were awaiting Fed Chairwoman Janet Yellen's Senate testimony for hints of when the US central bank could begin hiking interest rates. Yellen will share the outlook for the world's number one economy and monetary policy in the semi-annual testimony to the Senate Banking Committee today. Market participants will be looking at whether Yellen will reiterate the view that raising rates too soon could potentially derail the US economic recovery. Meanwhile, in Europe Greece will present its list of economic reforms to the Euro zone leaders today, missing a Monday deadline, to seal the deal of extending the country's financial lifeline.
Meanwhile, sales of previously owned homes in the US declined sharply in January to the lowest level since April last year, reflecting a shortage of properties on the housing market and rising prices that could potentially constrain the market this year. Existing home sales dropped 4.9% in January from the preceding month to a seasonally adjusted annual rate of 4.82 million, according to the National Association of Realtors.
New Zealand trade balance and US homes sales expected to worsen in January
Judging from average market expectations, both trade balance and new homes sales data in New Zealand in the United States are estimated to show deterioration for a month of January. Besides that, UK property market has probably cooled down slightly in the beginning of the year as a number of BBA mortgage approvals are due to be announced tomorrow as well.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 1,250 during the second week of February, following a day of considerable decline in price on February 6. 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 a major level at 1,200, the precious metal is likely to develop below this level in course of March. Moreover, in case of consolidation below the 2013 low at 1,180, a drop down to 2014 low at 1,130 will be broadly expected to take place toward the end of April.Daily chart
It seems that XAU/USD cross is getting ready to test a considerable support line at 1,198 (monthly S1) for a third time in last five days. Moreover, the bullion is now constantly losing value since Thursday of the previous week. If the metal eventually manages to overcome the demand, located just two US dollars below the current market price, then we should observe it retreating down to 1,187 this week (weekly S1). In case of failure to cross the support, Gold can be pushed upwards with a potential goal above weekly PP at 1,215.
Hourly chart
SWFX opened positions stay on positive side
Meanwhile, OANDA's bulls are enjoying a firm majority at the moment as their share of total opened trades is 64% in the morning on Tuesday (down from 72% on Monday). As a result, Gold's sentiment is remaining the fifth most positive among major currency pairs at OANDA. In addition, SaxoGroup market participants are also optimistic with respect to the yellow metal, as there are 65% of bullish positions registered by 7:00 GMT on Tuesday.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jan 24 and Feb 24 expect, on average, to see Gold trading around 1,250 by the end of May. At the same time, 52% 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 1,100 and 1,250.