- Opened positions on Gold remain strongly positive (73% bullish / 27% bearish)
- The closest resistance for the yellow metal is currently located at 1,187
- At the same time, the closest support for the bullion is placed at 1,180
- Upcoming events on May 5: US Trade Balance (Mar), Services PMI (Apr) and ISM Non-Manufacturing PMI (Apr), RBA Interest Rate Decision and Rate Statement, New Zealand Unemployment Rate (Q1)
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Manufacturing activity in the US continued to grow at a tepid pace in April as a recovery in new orders was offset by employment falling to its lowest level in more than five years. According to the Institute for Supply Management, the index of factory activity came in at 51.5 in April, remaining unchanged from the previous month, which had marked the lowest level since May 2013. The employment index slid into red territory for the first time since May 2013, declining to 48.3, the lowest level since September 2009. In March, the employment sub-index was 50.0.
A separate report showed, consumer confidence rose in April to the second-highest reading in more than eight years as Americans became more optimistic about their financial prospects. The University of Michigan said that its final index for the month jumped to 95.9 from 93 in March.
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Markets to wait for RBA's rate decision on Tuesday
Tomorrow, the Reserve Bank of Australia is expected to cut its main interest rate from 2.25% down to 2%, thus addressing too strong Aussie and deteriorating economic outlook. Besides that, New Zealand's unemployment has probably fallen from 5.7% to 5.5% in the first three months of this year, while US trade gap is set to widen in March due to Dollar's bullish development.Read More: Fundamental Analysis
XAU/USD develops inside bearish wedge pattern on daily chart
Since the second quarter of 2013, the bullion has been developing inside the falling wedge pattern, meaning that trading range is decreasing as time goes on. In March 2014, however, the yellow metal resumed gaining value, even without touching the lower trend-line, at that time located around 1,150. Towards the end of June gains are likely to be limited and the bullion should be driven by the 200-day SMA around 1,220 with a slight bearish bias. Eventually, bears are forecasted to overtake a lead and drive the metal back to the south. The overall negative trend for Gold seems to be the case in the long-term future, while at the end of this year the precious metal is likely to consolidate around 1,150, if the present trend persists.Daily chart
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Despite an attempt to test the 1,170 area, XAU/USD decided to return back towards the 2013 low by the end of the session. In addition, some bullish support was provided by the lower Bollinger band, currently at 1,174. If the bullion wants to confirm the medium-term bearish outlook, it should consolidate even below the weekly PP at 1,160. Otherwise, the precious metal will try to remain within a tight range below 1,194, where the price is going to be strongly limited by 55-day SMA and monthly PP.
Hourly chart
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Read More: Technical Analysis
SWFX opened positions on Gold remain strongly positive
Meanwhile, OANDA's bulls continue to enjoy a stable majority, and their share of total opened positions reached 75% in the morning today. Gold's sentiment at OANDA is currently the second most positive among all major currency pairs. Saxo Bank market participants, from their side, are also optimistic with respect to the precious metal, as there are 63% of bullish positions registered by 5:30am GMT on May 4
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Apr 4 and May 4 expect, on average, to see Gold trading around 1,230 by the end of August. At the same time, 48% of them still believe the bullion will be even above 1,250 in three months, while 32% of traders surveyed forecast the bullion to trade in the range between 1,100 and 1,250.
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