- Opened positions on Gold remain strongly positive (73% bullish / 27% bearish)
- The closest resistance for the yellow metal is currently located at 1,211
- At the same time, the closest support for the bullion is placed at 1,200
- Upcoming events on April 21: Germany ZEW Economic Sentiment (Apr), Reserve Bank of Australia Meeting Minutes, Japan Trade Balance (Mar)
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Gold traded above a key $1,200 level on Monday, after Beijing aggressively eased monetary policy at the weekend in the light of lacklustre economic performance of the world's second biggest economy. The People's Bank of China announced that it lowered the amount of deposits it requires banks to hold as reserves to 18.5% from 19.5% effective April 20.
The decision came after official data showed that China's economy grew 7.0% in the first quarter, the slowest pace since the global financial crisis in 2008. Data on industrial output, retail sales and fixed asset investment also came against economists' expectations, indicating that China's officials need to act to avoid a further slowdown.
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Japanese trade balance expected to show first surplus since July 2012
In the night between Tuesday and Wednesday, Japanese statistical authorities will announce the international trade numbers for the country in March. Export's growth is assumed to climb up to 8.5%, while import is predicted to retreat 12.8%. This situation is likely to lead to a first trade surplus in Japan since July 2012.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 the bullion is likely to develop in the direction of the upper boundary of this pattern just below 1,260 where bears are forecasted to overtake a lead and drive the metal back to the south. However, the metal can also be stopped by the 200-day SMA around 1,220. The overall negative trend for Gold seems inevitable in the long-term future, while at the end of this year the precious metal is likely to consolidate around 1,150, in case the present trend persists.Daily chart
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The precious metal remained capped by two technical levels on Friday, as 55 and 20-day SMA denied the idea of developing above 1,205 or below 1,195. However, this week these levels, together with weekly PP at 1,198 make up a dense support zone. Judging from daily technical indicators, the bullish scenario is more preferable for Monday. In case the bullion remains above 1,200, it may jump as high as 1,213 in the near-term. However, a fall below the round mark will provide bears with momentum to drive Gold down to 1,188 (weekly S1).
Hourly chart
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SWFX opened positions on Gold remain strongly positive
Meanwhile, OANDA's bulls continue to enjoy a firm majority as their share of total opened positions stays at 63.39% at the moment, and Gold's sentiment there is currently the fifth most positive among all major currency pairs. Saxo Bank market participants, in turn, are also confident with respect to the precious metal, as there are 58% of bullish positions registered by 5:30am GMT on April 20.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Mar 20 and Apr 20 expect, on average, to see Gold trading around 1,250 by the end of July. At the same time, 57% of them still believe the bullion will be strongly above this mark in three months, while 30% of traders surveyed forecast the bullion to trade in the range between 1,100 and 1,250.
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