After meeting a lower trend line of an ascending pattern for the second time, gold jumped on Tuesday. The surge paused only at the 1,285.00 level.
In general, the metal's price was expected to continue the surge.
The Federal Reserve releases US FOMC Meeting Minutes where fed officials provide in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.
The meeting summary stated, "With an increase in the target range at this meeting, the federal funds rate would be at or close to the lower end of the range of estimates of the longer-run neutral interest rate, and participants expressed that recent developments, including the volatility in financial markets and the increased concerns about global growth, made the appropriate extent and timing of future policy firming less clear than earlier."
No influence on Gold from macro releases this week
As it is accustomed, the third week of the month is expected to be rather empty for macroeconomic data releases. Although, there are a couple of releases to look forward to this week.On Tuesday, the UK Average Earnings Index was published at 09:30 GMT. The results of the event can be seen by clicking the link below.
On Wednesday, look forward to the Canadian Retail Sales data release at 13:30 GMT. This event most likely will be the only one notable enough during the rest of the week to be traded by currency release traders.
On Thursday, main attention of fundamental event traders will be on the ECB Rate Announcement at 12:45 GMT. The volatility on the EUR charts usually increases during the ECB Press Conference, which will start at 13:30 GMT.
Meanwhile, oil traders will most likely catch a one percent move at 15:30 GMT. The data release has been providing moves of more than one percent during the last month and a half.
XAU/USD short term forecast
During Tuesday's morning hours, the yellow metal appreciated against the US Dollar to the 1,284.00 level.
In regards to the near-term future, most likely, the gold will break the resistance of the 55-hour simple moving average at 1,284.00 to surge to the 1,288.00 level. It is expected that the 55-hour simple moving average will support the surge during the trading session on Tuesday.
However, the yellow metal could be resisted by the 55-hour simple moving average at 1,283.89 to depreciate against the US Dollar to the 1,276.00 level.
Hourly Chart
A large scale review of the yellow metal's daily chart has been conducted. Zoom out the chart to see more details.In general we have identified three patterns, which represent three various large scale trends. Two of the patterns are junior to the dominant one and have guided the commodity price into the upper trend line of the largest pattern.
The commodity price is set to test and make one attempt after another to pass the upper trend line of the just mentioned pattern near the 1,300.00 mark.
From a fundamental large scale perspective, if the US Federal Reserve slows down their restrictive monetary policy, then the US Dollar would lose value. In that case gold prices will surge above the 1,300 level.
It could occur through a sudden jump caused by a Federal Funds Rate announcement or a press conference hosted by the central bankers.
Daily Chart
Traders short the yellow metal
For a week traders have been short on gold. On Tuesday, traders were 57% short on the metal.
In the meantime, trader pending orders in the 1000-base point range were set to sell. Namely, 70% of orders were set to sell.
In general, traders are shorting the metal. They expect a larger decline to occur.
Moreover, more traders want to open additional sell orders, when the rate clearly passes the support line that is described above.