- Opened positions on gold are strongly bullish (63% long / 37% short)
- The immediate resistance for the yellow metal is currently located at 1,161
- At the same time, the nearby support for the bullion is placed at 1,154
- Important economic events to follow in the next 24 hours: US Industrial Production (Jun) and PPI (Jun), Eurogroup Meeting, Greece Parliament Bailout Vote, Fed Chair Yellen Testifies, UK Claimant Count Change (Jun) and Unemployment Rate (3M-May), Bank of Canada Interest Rate Decision, Canada Manufacturing Sales (May), Australia Consumer Inflation Expectations (Jul)
© Dukascopy Bank SA
Gold rose slightly on Wednesday as China's economy reported better than expected growth, industrial production and retail sales. The world's second biggest economy expanded an annualized 7% in the three months through June, compared with economists forecast for a 6.9% growth. Industrial production rose an annualized 6.8% in June, compared with a 6.0% gain expected by analysts, and retail sales soared 10.6%.
Meanwhile, retail sales in the US unexpectedly declined in June, questioning strength of the rebound in consumer spending during the second quarter. Sales at retailers and restaurants fell 0.3% from May to a seasonally adjusted $442 billion in June, according to the Commerce Department. Economists, however, had expected a 0.2% gain. Retail sales in May were revised downwards to show a 1.0% growth in the reported month, compared with a 1.2% gain estimated earlier.
Watch More: Dukascopy TV
Bank of Canada to consider more dovish policy stance
There are plenty fundamental events to follow in the next 24 hours. Among the most important ones, the Bank of Canada is due to make its interest rate decision today by 14:00 PM GMT. Even though the average expectation suggests no changes to the current rate of 0.75%, there still exists a probability of further loosening of the monetary policy stance in order to combat low economic growth. Additionally, the labour market statistics from Britain is expected today at 08:30 AM GMT.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. Two pattern's boundaries are represented by the upper trend-line around 1,270 and pattern's support at 1,115. Among recent developments, in March 2015 the yellow metal resumed gaining value, even without touching the lower trend-line, but the growth stalled beneath the 2009 high at 1,230. In the foreseeable future the rally is likely to be limited and the bullion should be driven by the 200-day SMA around 1,200, which has a slight bearish bias. Some short-term gains in the direction of the long-term downtrend (1,270) are not completely off the table, but bears are eventually going to overtake a lead and drive the metal back to the south. The overall negative tendency for gold seems to be the case in the long run, while at the end of this year the precious metal should to consolidate around 1,150, in case the present trend persists.Daily chart
© Dukascopy Bank SA
In spite of quite pessimistic US statistics on retail sales, the bullion decided to trade in a calm way on Tuesday, by showing only minor daily swings. Gold rejected to grow above 1,160, keeping in mind resistances at 1,161 (weekly PP) and 1,167 (20-day SMA). On the other hand, a substantial demand at 1,154 (monthly S1) forced bears to capitulate for a fourth time in seven trading days. Therefore, only a close below this support will clarify the medium-term outlook, which in turn remains negative in the short-term.
Hourly chart
© Dukascopy Bank SA
Read More: Technical Analysis
SWFX sentiment strongly bullish toward gold
Meanwhile, OANDA's bulls are in the safe majority with 77.58% of all current positions. Gold's sentiment at there is the second most positive among all major crosses at the moment. Saxo Bank market participants are also optimistic towards to the precious metal, as there are 71% of bullish trades registered in the morning on July 15.
Spreads (avg,pip) / Trading volume / Volatility
Traders, who were asked regarding their longer-term views on XAU/USD between Jun 15 and Jul 15 expect, on average, to see Gold trading just below 1,175 by the end of October. At the same time, 55% of them still believe the bullion will be strongly above 1,150 in three months, while 31% of traders surveyed forecast the bullion to trade in the range between 1,000 and 1,150.
© Dukascopy Bank SA