- Market sentiment is 51% short
- 59% of pending orders in 1000-pip range are set to BUY gold
- Gold fails to reach above new heights
- Data only on Wednesday
As the yellow metal was failing to pass the levels near the 1,360 mark, a review of the commodity price's charts was conducted. Namely, a resistance line of a long term descending pattern was discovered.
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.
Quiet session
As the second empty session of the week was in progress, the Dukascopy research team looked upon the future. Namely, late part of Wednesday's trading will have a notable event.
The FOMC Meeting Minutes are set to be released at 19:00 GMT. However, the data release will not be covered by the Dukascopy Research team.
XAU/USD could reverse from 1,335
The first part of Monday's session was spent with no changes to the overall market price, as Gold was fluctuating in a narrow range between the 55– and 100-hour SMAs. The latter, reinforced by the bottom boundary of a two-week channel up, was breached late in the evening, thus pushing the rate closer to the 200-hour SMA, the 23.60% Fibo retracement and the monthly PP circa 1,335.00.
Technical oscillators have been pushed in the strongly oversold region, thus pointing to a possible recovery during this session. Thus, the base scenario favours a test of the aforementioned 1,335.00 level and a subsequent surge towards the 55– and 100-hour SMAs.
By and large, moving averages are expected to be strong barriers that should not surrender today.
Hourly Chart
As apparent on the daily chart, the metal's price is trading in a long term ascending channel. The pair should form a new medium-term channel within its bounds; however, it might take some time for it to reveal itself. Daily technical indicators are in favour of a possible fall this week.
Daily Chart
Market sentiment almost neutral
SWFX market sentiment remains bearish, as 51% of open positions are short. Meanwhile, 64% of pending commands are to buy the commodity.
OANDA traders are bearish, as 58% of open positions are short (+1%). Meanwhile, SAXO bank traders are likewise bearish, as 51% of open positions are short (-3%).