- Opened positions on gold are strongly bullish (71% long / 29% short)
- The closest resistance for the yellow metal is currently located at 1,179
- At the same time, the closest support for the bullion is placed at 1,162
- Upcoming events on June 10: US Monthly Budget Statement (May), Italy and France Industrial Production (Apr), UK Manufacturing Production (Apr) and NIESR GDP Estimate (3M-May), RBNZ Interest Rate Decision and Monetary Policy Statement, BoE Governor Mark Carney Speech
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Gold rose on Tuesday, as weak inflationary pressure in China justified easy policy in one of the main buyers of bullion. Chinese consumer prices dropped 0.2% in May, weaker than the flat reading expected, while producer prices slumped 4.6%, compared with the forecasted 4.5% decline. Yet, investors' positioning continued to point to bearish sentiment. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, are at their lowest since mid-January, undermining any gains in the precious metal.
Meanwhile, Canada's housing starts rose to the highest level in nearly a year in May, led by an advance in multiple-unit construction, including apartments and condos. Housing starts increased to 201,705 units last month, according to the Canadian Mortgage and Housing Corp report, beating market expectations for 185,000. Overall, Canadian housing starts increased 10% to an annualized pace of 207,100 in May from April.
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New Zealand rate decision is due on Wednesday
The Reserve Bank of New Zealand maintained its key interest rate at 3.5% last month, even despite the economic uncertainty in Australia and China, the New Zealand's main trading partners. Moreover, inflation in the country remains low, but is forecasted to pick up later this year. Therefore, the RBNZ is likely to keep rates unchanged for now, while waiting for more pronounced signals on trends in the domestic and global economy.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. In the foreseeable future gains are likely to be limited and the bullion should be driven by the 200-day SMA around 1,210 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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XAU/USD snapped its three-day streak of losses, while gaining some value during the trading session on Monday. The yellow metal was supported by the Greenback's weakness, which pared gains after the last week's bullish development. At the same time, the metal remained broadly between two major technical levels at 1,162 and 1,179. Daily technical indicators continue sending mixed signals, but both RSI and Stochastic are still bullish. Weekly and monthly studies, however, are moderately bearish at the moment.
Hourly chart
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SWFX long opened positions on gold surpass 70% mark
Meanwhile, OANDA's bulls are in the safe majority with 74.18% 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 were 63% of bullish trades registered by 5:30 AM GMT on June 9.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between May 9 and June 9 expect, on average, to see Gold trading around 1,225 by the end of September. At the same time, 61% of them believe the bullion will be even strongly above 1,200 in three months, while 25% of traders surveyed forecast the bullion to trade in the range between 1,050 and 1,200.
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