- Opened positions on Gold remain bullish (63% long / 37% short)
- The closest resistance for the yellow metal is currently located at 1,193
- At the same time, the closest support for the bullion is placed at 1,177
- Upcoming events on June 2: Germany Unemployment Rate/Unemployment Change (May), Spain Unemployment Change (May), Euro zone CPI (May), US Factory Orders (Apr), UK Construction PMI (May), RBA Interest Rate Decision and Rate Statement
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The world's number economy contracted in the first quarter depressed by brutal weather and a higher-valued Dollar. The government revised its gross domestic product estimate to show it falling at a 0.7% annual rate compared with the 0.2% growth pace it estimated last month. A larger trade deficit and a smaller accumulation of inventories by businesses than previously estimated were the main contributors to the downward revision.
Consumer spending, which makes up about 70% of economic activity, slowed to growth of just 1.8% in the first quarter, slightly below the 1.9% gain initially estimated. With growth estimates so far for the second quarter around 2%, the economy appears to set for its worst first-half performance since 2011.
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RBA to keep rates unchanged after May move
The Reserve Bank of Australia cut the benchmark interest rate to by 25 basis points to 2% in its May meeting, and this move has been anticipated by the market. However, the regulator is not expected to make any changes to the monetary policy stance tomorrow, even though the RBA Governor Glenn Stevens noted that further decreases of the interest rate are not off the table in the future.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 1,120. Among recent developments, in March 2015 the yellow metal resumed gaining value, even without touching the lower trend-line. In the foreseeable future 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. 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 XAU/USD cross continued to trade mostly sideways in course of last trading session of the previous week. Any attempts to erase Tuesday's losses were capped by a strong resistance around 1,195. This supply area, which consists of monthly PP and 55-day SMA, is most probably going to keep bulls under pressure during the first days of a new week. However, any move above 1,197 will provide a great opportunity for bulls to push the bullion as high as 1,211 (200-day SMA). On the other hand, bears will continue to target the May 1 low at 1,169.
Hourly chart
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Read More: Technical Analysis
SWFX opened positions on gold are positive
However, OANDA's bulls continue to enjoy the stable majority with 73.56% of all current positions. Gold's sentiment at OANDA is the second most positive among all major currency pairs at the moment. Saxo Bank market participants are also optimistic with respect to the precious metal, as there are 62% of bullish trades registered by 5:30 AM GMT on June 1.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between May 1 and Jun 1 expect, on average, to see Gold trading around 1,230 by the end of August. At the same time, 58% of them believe the bullion will be strongly above 1,200 in three months, while 31% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
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