Gold jumped considerably due to weakness of the American dollar and falling stock markets all across the world. The former is poised for the strongest decline in a month versus the basket of ten major currencies. At the same time, equity markets plummeted on concern the Chinese economy is slowing. Moreover, analysts expect there will be an election called in Greece, while the country is now only returning back to growth. Since November 7, the Gold's price has already surged 9%, since investors prefer this safe-haven metal amid signs of further monetary easing from central banks in Asia and Europe. Besides that, a considerable impact and volatility on the bullion come from oil prices.
Concerning other fundamental data back on Tuesday, US wholesale inventories rose more than expected in October, which is likely to result in a boost to the fourth quarter GDP numbers. The Commerce Department reported wholesale stocks increased 0.4%, while September's wholesale inventories were revised up to show a 0.4% rise. Inventories are a one of the key components of gross domestic product changes. The component that is included to the calculation of economic output -wholesale stocks excluding autos - jumped 0.6%. The US economy expanded at a 3.9% rate in the third quarter, with inventories acting as a mild drag.
Major impact on Gold to come from central banks on Thursday
Tomorrow, there are going to be a number of important meetings in different central banks across the world, which are likely to influence the price of Gold as a safe-haven metal. RBNZ and the Swiss National Bank are due to announce fresh interest rates, while the ECB is preparing for the second round of its TLTRO program. Along with that, there will be some additional statistics of high importance, including retail sales in the US and unemployment rate in Australia.XAU/USD jumps above down-trend despite bearish forecasts
The XAU/USD cross has breached the most important resistance line, represented by the long-term downtrend and is now developing above this level. Therefore, a descending triangle pattern has been confirmed to the north, meaning that the pair has all opportunities to gain further value. At the same time, there is a chance for Gold to return back, in case the US currency recovers in the foreseeable future and economic conditions improve globally. At the moment the most considerable resistance is represented by the monthly R3 at $1,281, while the downtrend changed the role to become the main support. Nevertheless, by the end of the year we would suggest the Gold to depreciate and trade in the direction of the monthly PP at $1,168.Daily chart
The bullion rebounded significantly on Tuesday, as bullish impetus was received from the monthly R1 and 55-day SMA around $1,205. Also reflecting weakness of the US dollar, the Gold climbed up to the weekly R1 and 100-day SMA around $1,230. Despite the strong bullish development, daily technical studies are still pointing to the north, meaning that the pair may consolidate around current trading levels. In the medium-term, however, we assume the bullion to decline, as considered by the weekly technical indicators.
Hourly chart