- Opened positions for Gold remain positive with a confident majority of bullish trades (73% bullish / 27% bearish)
- It is possible that Gold will grow in price further, with the closest resistance for it located at 1,274
- At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,260
- Upcoming events on January 31 – February 2: China, UK, Canada, Spain, Italy, France, Germany, Eurozone and US Manufacturing PMIs (Jan), Spain Unemployment Change (Jan), Eurozone Unemployment Rate (Jan), US Personal Spending (Dec), Japan Monetary Base (Jan)
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Meanwhile, Gold declined to the lowest level in two weeks amid concerns over US interest rates hike on the horizon, with the precious metal still being poised for the biggest weekly decrease in two months. Nevertheless, it is expected that increased liquidity through the ECB's quantitative easing programme would support the yellow metal in the foreseeable future. Bullion has fallen 2.6% so far this week, but the metal rose 6.5% in January, heading towards the biggest monthly gain since February last year after hitting a five-month peak of $1,306.20 last week.
The number of Americans seeking unemployment benefits plunged to the lowest level in 15 years in the week ended January 23, a day after the Fed painted an optimistic outlook for the world's number one economy. According to the US Department of Labour, initial jobless claims dropped to 265,000, following a revised 308,000 in the preceding week. It was the biggest weekly fall since November 2012.
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Manufacturing PMI data to be closely watched on Monday
In addition to several Eurozone countries and the United States in terms of important fundamental statistics on activity in the manufacturing industry, UK, China and Canada will publish these numbers on Monday as well. This data altogether is likely to create influence on Gold during the first day of new week. Besides that, Eurostat will also publish the latest numbers on joblessness in the single currency area, with no major improvements estimated, while US personal spending probably fell 0.2% in December.Read More: Fundamental Analysis
XAU/USD keeps medium-term bullish momentum
The XAU/USD cross has breached the most important resistance line on January 3, which is represented by the long-term downtrend at $1,218. Consequently, it started to develop above this level to hit $1,300 mark already on January 21. At the moment, it seems unlikely for gold to be able to return back below $1,200 in the foreseeable future. Moreover, if the bullion manages to remain above $1,250, then we may see metal's further increase in the medium-term. Nevertheless, the long-term outlook for the yellow metal tends to remain negative, mostly reflecting strength of US fundamental factors and gradual recovery in Europe. Therefore, in towards the end of Q1 2015 gold is still suggested to lose value.Daily chart
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The most significant decline of XAU/USD cross since December 15 took place on Thursday of this week. Due to strong US fundamentals, Gold dropped around $30 per ounce to fall below the 50% Fibonacci retracement at $1,260. Total daily losses, in turn, were only stopped by 55-day SMA around $1,252 and the precious metal rebounded slightly to close the trading at $1,257. Following that, daily technical indicators stopped giving bullish signals on Gold as they are now staying neutral with respect to metal's perspectives.
Hourly chart
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SWFX opened trades on Gold are unchanged at 73% vs 27%
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Dec 30 and Jan 30 expect, on average, to see Gold trading just above 1,300 by the end of April. At the same time, 53% of them believe the bullion will be strongly above this mark in three months, while 33% of traders surveyed forecast the bullion to trade in the range between 1,150 and 1,300.
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