- Market sentiment is 51% short
- 59% of pending orders in 1000-pip range are set to SELL gold
- Metal's price reaches 1,360 level
- US Building Permits might create noise
The surge of the metal's price has been continuing tightly next to the upper trend line of the ascending channel pattern. It seems that it has finally encountered resistance, which might force a decline or cause horizontal price movement.
The Labour Department revealed that the US Producer Price Index climbed 0.4% in January, as forecasted. Data backed-up its growth rate with a strong increase in health care and gasoline prices, which moved up 0.7% and 7.1%, respectively.
The PPI report fuelled expectations that price growth would accelerate in 2018 even with weaker correlation with inflation of consumer prices. Inflation is likely to be lifted towards the Fed's 2% target, owing to tightening job market, weak US Dollar, as well as larger government spending and tax reform.
US Building Permits in focus
On Friday there is one notable data release to watch out for. Namely, the US Building permits data set is scheduled to be published at 13:30 GMT.
However, our analysts consider the release insignificant, as it has shown no notable fluctuations in historically. Although, be careful, as a large surprise in the data might cause a move that would be strong enough to trigger trailing stop losses.
XAU/USD allays near 2017 high
Following the massive hourly advance mid-Wednesday, the yellow metal has made no significant changes to its price level, thus remaining in the 1,350.00/1,360.00 range ever since.
If looking at the chart, the pair has been moving neatly along the bottom boundary of the breached two-month channel.
Technical indicators demonstrate that Gold has still some upside potential that could be realised today. However, the commodity was reluctant to push higher during the previous session. Thus, gains could also be limited today, especially if taking into account the fact that the pair is located near the 2017/2018 high of 1,365.00.
It is likely that US Building Permits released at 1330GMT introduce some volatility in the market; however, Gold should maintain its trading range between 1,365.00 and 1,335.00.
Hourly Chart
The previous channel down pattern of the daily chart has been broken. Due to that reason a review of the metal's price is being conducted.
What can be observed is that the metal's price is trading in a long term ascending channel pattern. In the borders of that pattern there should form a new medium term pattern. However, it might take some time for it to reveal itself.
Daily Chart
Market sentiment is in neutral zone
SWFX market sentiment has become neutral, as 50% of open positions are long. Meanwhile, 55% of pending commands are once again to buy the commodity.
OANDA traders are bearish, as 54% of open positions are short. Meanwhile, SAXO bank traders have become largely bearish, as 56% of open positions are short.