- Opened positions on gold are strongly bullish (69% long / 31% short)
- The immediate resistance for the yellow metal is currently located at 1,171
- At the same time, the nearby support for the bullion is placed at 1,154
- Upcoming events in the next 24 hours: Greece Unemployment Rate (Apr), US Unemployment Claims (Jul 3), Bank of England Interest Rate Decision and Asset Purchase Facility, Canada Housing Starts (Jun)
Gold remained steady and traded above the lowest level in four month on Thursday as the Greek financial crisis and China's stock rout failed to spark safe-haven demand. Meanwhile, the minutes of the latest FOMC showed Fed officials were concerned about the possible effect of the Greek debt crisis on the US economy. They also voiced concerns about future growth in China, the world's second largest economy, and other emerging markets. The developments abroad could potentially derail the US economy in part by pushing the US Dollar higher and hurting US exports. Nevertheless, the Fed remains on track to hike interest rates later this year.
Meanwhile, UK Chancellor George Osborne delivered the first budget by a majority Tory government since 1996 on Wednesday, introducing deep cuts to the UK's benefit system. The government plans to reduce public sector net borrowing to 69.5 billion pounds this year, slightly lower than the 75 billion pounds the OBR had expected. Corporation tax will be cut further, with the rate, levied on company profits, falling to 19% in 2019, and 18% in 2020.
BoE interest rate decision is due today
On Thursday the Bank of England's Monetary Policy Committee will make an interest rate decision, which is expected to bring no surprises this time. The key rate is forecasted to remain flat at 0.5%, while the QE amount will most probably stay unchanged at 375 billion pounds. The BoE decision will be announced today by 14:00 PM GMT.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
XAU/USD made a second attempt to close below the major support level of 1,154 yesterday, which is reinforced by the monthly and weekly S1. However, this demand used to be reliable enough to keep bears aside and even provide long market participants with some positive momentum. As a result, gold closed the day at the 1,158 mark and it continues growing today as well. The current base scenario indicates a surge in the direction of 1,171 (weekly PP), which is strengthened by 20-day SMA from above. Despite that, weekly technical indicators are quite pessimistic towards the bullion at the moment.
Hourly chart
SWFX sentiment strongly bullish toward gold
Meanwhile, OANDA's bulls are in the safe majority with 77.66% 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 towards to the precious metal, as there were 70% of bullish trades registered by 5:30 AM GMT on July 9.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jun 9 and Jul 9 expect, on average, to see Gold trading just below 1,160 by the end of October. At the same time, 53% of them still believe the bullion will be strongly above 1,150 in three months, while 31% of traders surveyed forecast the bullion to trade in the range between 1,100 and 1,250.