Gold has prolonged bullish trading session with a 1251.34 high yesterday and currently, XAU/USD is confined 47-pips range price action, slightly above 50-SMA (H1). Overall, gold added +$53.89 since March Fed hike. USD collapsed dramatically on Tuesday and extended losses yesterday at 99.32 low, digging deeper for 2017-new-lows at 99.19, which supported gold bullish momentum.
History and logic suggest that when the United States starts a monetary tightening cycle, gold will under-perform, since as a non-yielding asset it loses out to instruments that will enjoy higher yields from the rising rates.
According to the World Gold Council (WGC), China's gold demand has dropped this year, with third quarter consumer demand at 182.5 tons, down 22% from the same period in 2015, while India's 194.8 tons is 28% lower. Analysts are expecting China's and India's gold demand to remain steady in 2017. China and India are the world's biggest gold-consuming nations.
Today, U.S economic data is heavy first with Unemployment claims which in case positive, should re-balance U.S index levels with upward correction, but the main focus is on Yellen's speech and traders will try to decipher words and signals out of her speech.
Fundamentals:
1- USD unemployment rate today at 12:30 PM GMT.
2- USD Yellen speech today at 12:45 PM GMT.
Technical :
Trend : Bullish Sideways
Daily Pp 1247
Resistance levels : R1 1252.20, R2 1264.87, R3 1280.76
Support levels : S1 1242.33, S2 1230.62, S3 1218.83
Remark : Overall gold is bullish but U.S data today is vital especially Yellen speech in relation with low USD levels. Stalling above R1 level is a Déjà vu of last 2 weeks rallies with R2 level as target. Closing above R2 projects further bullish attacks at R3 level. A stall around 1251 could prompt setbacks, but trade should hold within Tuesday's range to maintain strong bull forces. Closing below S2 alerts for trend reversal and market to consider gold bearish. U.S index is the main player.
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