- 51% of open positions are long and 49% are short
- Gold is about to touch August's high
- Losses should be limited by 1,120
- Economic events to watch in the next 24 hours: FOMC Member Lockhart, Evans and Brainard Speeches
© Bloomberg
Gold traded close to its highest level in seven weeks on Monday, supported by expectations the Fed would refrain from hiking interest rates in the foreseeable future. Recent soft US fundamentals and concerns over the global economy have prompted many economists to believe the first rate hike in nearly a decade will be delayed this year.
Moreover, Fed Vice Chairman Stanley Fischer said policy makers were still likely to raise rates this year, but that is "an expectation, not a commitment", and could change if the global economy further derails the world's number one economy.
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Holidays in the USA, Canada and Japan
Most of the bankers, and not only in the USA, are on holidays, which is a reason to believe that today there should be no sudden large moves. Nevertheless, potential risk events are present. Several of the FOMC voting members are to deliver speeches today, and this could have an influence on how the market perceives the likelihood of a rate hike during the next Fed meetings.
Read More: Fundamental Analysis
Gold closes in on August high
Gold is about to touch August's high, which is strengthened by the weekly R1 and the Bollinger band. A close above this level will not imply a bullish outlook, mainly because of the supply zone around 1,180 dollars, where the weekly R2 joins forces with the monthly R2 and 200-day SMA. If the precious metal gains a foothold above this area, however, the next target may well be 1,230, namely the May high and the falling resistance from the weekly chart. In case of a strong sell-off in the nearest future the losses should be limited by 1,120 (monthly PP, 55-day SMA and up-trend), but we can also expect a small rebound from the 100-day SMA at 1,140.Daily chart
© Dukascopy Bank SA
The hourly chart does not introduce a lot of new important levels, but the 200-hour SMA does suggest that a move past 1,140/35 may not by in fact be that easy, while its violation could open a path for a dive down to the up-trend at 1,110.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
SWFX traders undecided; elsewhere sentiment is bullish
At the same time, the sentiment is bullish among OANDA and SAXO Bank traders, although we must note that it is deteriorating. Over the weekend, the share of bulls at OANDA decreased from 58 to 56%, while the portion of longs at SAXO Bank contracted from 61 to 59%.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast for the end of January 2016 is 1,170
Meanwhile, traders, who were asked regarding their longer-term views on gold between Sep 9 and Oct 9 expect, on average, to see the metal around 1,170 by the end of January. Though, 62% of participants believe the price will generally above 1,150 in ninety days. Alongside, only 21% of those surveyed reckon the price will trade in the range between 1,150 and 1,000 by the end of next year's first calendar month. © Dukascopy Bank SA