- Opened positions on gold are strongly bullish (73% long / 27% short)
- The immediate resistance for the yellow metal is currently located at 1,154
- At the same time, the nearby support for the bullion is placed at 1,149
- Upcoming events in the next 24 hours: FOMC Minutes, Germany Trade Balance (May), UK Annual Budget Release, Canada Building Permits (May), Japan Machinery Orders (May), China CPI (Jun), Australia Employment Change/Unemployment Rate (Jun)
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Gold traded near its lowest level since March on Wednesday as the Greek debt crisis supported the US Dollar, hitting bullion's allure as a safe-have asset. Adding to jitters in the Euro zone is the precipitous sell-off in China's stock market. Gold, typically considered as an alternative investment in times of financial and economic turbulence, has failed to enjoy significant safe-haven interest from either of those developments due to a stronger Dollar. While traders continue to keep an eye on how the Greek debt crisis will unfold, they will also scrutinize the FOMC meeting minutes released later in the day to look for clues on when the Fed may start hiking interest rates.
Meanwhile, The US trade deficit increased 2.9% in May amid weak exports of aircraft and other manufacturing goods. The US trade shortfall rose to a seasonally adjusted $41.9 billion from a revised $40.7 billion in April, the Commerce Department said. Exports fell 0.8% to $188.6 billion, undermined by a strong Dollar and lacklustre growth outside the US. At the same time, imports declined 0.1% to $230.5 billion.
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All eyes on Australian, Chinese data today
The most important statistics is going to be released in Asia later today. At first, Japanese core machinery orders are due at 23:50 PM GMT in the night between Wednesday and Thursday, which are estimated to drop 4.8% in May on a monthly basis after a 3.8% surge back in April. At 1:30 AM GMT the bunch of news will be published in Australia and China. Markets expect to see inflation numbers from the world's second largest economy, while Australia will announce important labour market statistics. Apart from Asian news, today the UK Chancellor of Exchequer George Osborne will present the Britain's Conservative-only budget for the first time since 1996.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 1,115. Among recent developments, in March 2015 the yellow metal resumed gaining value, even without touching the lower trend-line, but the growth stalled beneath the 2009 high at 1,230. In the foreseeable future the rally is likely to be limited and the bullion should be driven by the 200-day SMA around 1,200, which has 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 nearest reliable support for gold at 1,154 is unlikely to withstand the bearish pressure successfully, following a deep slump in the metal's value on Tuesday. In case the bullion consolidates below this demand today, it will shift the near-term outlook substantially to the negative side. The immediate support is located as low as 1,148, where XAU/USD bottomed out yesterday. However, bears are more probably going to target the 1,140 mark (weekly S1), which is instantly followed by the 2014 low at 1,131.
Hourly chart
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SWFX sentiment strongly bullish toward gold
Meanwhile, OANDA's bulls are in the safe majority with 79% of all current positions. Gold's sentiment at OANDA is the second most positive among all major crosses at the moment. Saxo Bank market participants are also optimistic with respect to the precious metal, as there were 70% of bullish trades registered by 5:30 AM GMT on July 8.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jun 8 and Jul 8 expect, on average, to see Gold trading just below 1,160 by the end of October. At the same time, 56% of them still believe the bullion will be strongly above 1,150 in three months, while 29% of traders surveyed forecast the bullion to trade in the range between 1,100 and 1,250.
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