- Opened positions on Gold remain positive with a slight majority of bullish trades (55% bullish / 45% bearish)
- The closest resistance for the yellow metal is currently located at 1,207
- At the same time, the closest support for the bullion is placed at 1,195
- Upcoming events on March 5: France Unemployment (Q4), Germany Factory Orders (Jan), Italy GDP (Q4), ECB Interest Rate Decision and Press Conference, US Unemployment Claims (Feb 27) and Factory Orders (Jan), Australia Retail Sales (Jan) and Trade Balance (Jan), Bank of England Interest Rate Decision and Asset Purchase Facility, Canada Ivey PMI (Feb)
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Gold rebounded on Wednesday after a two-day losing streak as a retreat in the US Dollar boosted the precious metal. Yet, investors remained cautious ahead of the ECB meeting tomorrow and important US economic data later today. ADP's report on non-farm employment is expected to show a 219,000 increase in private payrolls in February, suggesting further improvement in the US labour market.
Thus, bullion could remain under pressure due to anticipation of positive US fundamentals. On top of that, holdings in SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, dropped 0.35% to 760.80 tonnes on Tuesday, the second consecutive day of outflows, and following a near-8-tonne plunge on Monday, the biggest outflow this year.
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ECB, BoE to hold monetary policy meeting on Thursday
Thursday of this week is definitely going to be the day of central banks. Two major monetary policy regulators, the Bank of England and the European Central Bank, are both holding their scheduled meetings tomorrow. At the same time, no surprising decisions are expected from both of them. Besides that, markets will closely watch Australian retail sales and international trade data for January, as well as German and American factory orders for the same month.Read More: Fundamental Analysis
XAU/USD develops inside bearish channel on daily chart
On January 22, the level at 1,300 which acted as a strong supply for Gold forced the yellow metal to resume declining. Moreover, the bullion succeeded in consolidating below 1,250 during the second week of February, following a day of considerable decline in price on February 6. Taking into account strength of US fundamental factors and potential positive effects from the expanded asset purchases programme in the Eurozone, the long-term outlook for Gold is remaining fairly bearish. Even though some medium-term bullishness can be created by a major level at 1,200, the precious metal is likely to develop below this level in course of March. Moreover, in case of consolidation below the 2013 low at 1,180, a drop down to 2014 low at 1,130 will be broadly expected to take place toward the end of April.Daily chart
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Despite strong Gold price's fluctuations on Tuesday, the metal registered only a marginal daily change. All in all, the bullion was capped by resistance at 1,207 (weekly PP) and closed around 1,203 at the end of yesterday's trading session. Taking into consideration fairly bearish technical indicators on a daily chart, the closest resistance should be strong enough to give bears impetus for future attempts to push the metal lower. Therefore, the short term outlook tends to remain pessimistic, with the closest target at 1,195 (weekly S1).
Hourly chart
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SWFX opened positions stay slightly positive
Meanwhile, OANDA's bulls continue to enjoy a firm majority as their share of total opened trades stays at 70.5% at the moment, down half a percentage point from Tuesday. As a result, Gold's sentiment is currently remaining the second most positive among major currency pairs at OANDA. In addition, SaxoGroup market participants are also optimistic with respect to the yellow metal, as there are 64% of bullish positions registered by 6:30 GMT today, no change for two consecutive days.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Feb 4 and Mar 4 expect, on average, to see Gold trading just below 1,250 by the end of June. At the same time, 51% of them still believe the bullion will be strongly above this mark 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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