On Monday, the decline continued, as the commodity price reached below the 1,990.00 and 1,980.00 levels. In general, the price could either consolidate until the hourly simple moving averages catch up or continue to decline. Economic Calendar Analysis
On Tuesday, the US Dollar is set to adjust to the monthly US Consumer Price Index release at 13:30 GMT. Inflation is expected to have been unchanged month on month and an annual decline from 3.2% down to 3.1% is expected. Meanwhile, the market consensus is that core inflation might have increased due to winter increasing demand for energy consumption.
On Wednesday, the top event of them all will take place. The US Federal Reserve will announce its Federal Funds Rate. The central bank is expected to keep the rate at 5.50%. Moreover, note the follow up press conference of the Chairman of the Federal Reserve Jerome Powell. The events are scheduled for 19:00 and 19:30 GMT.
On Friday, the markets could move if one of the Markit Institute Flash Services and Manufacturing PMI survey results reveal a surprise. Starting from 08:15 GMT up to 14:45 GMT the institute will release data for Eurozone countries, the United Kingdom and the United States.
XAU/USD short-term forecast
A consolidation of the commodity price might result in the metal trading flat around 1,980.00 or a retracement back up to the resistance of the 1,990.00 level or the 2,000.00 mark.
In the case of an extension of the decline, support might be found in 1,970.00 or 1,950.00 levels.
XAU/USD daily charts review
On the daily candle chart, the metal has passed below the prior resistance range at 2,005.15/2,009.70. The range did not turn into support. Moreover, the lower trend line of the channel pattern that guided the metal up since October also failed.On Monday, support was found in the 50-day simple moving average near 1,980.00. Note that below the 50-day SMA, the 100 and 200-day SMAs are strengthening the 1,950.00 level.
Daily Candle Chart
Gold traders are still shorting
Last week, 63% of volume was in short positions. Pending orders in the 1000 point range around the current price were 88% to sell.
On Monday, traders were 55% short, but orders were 57% to sell.