Monday, November 24, 2014

XAU/USD is showing limited movement

Gold has posted modest gains on Thursday, recovering losses sustained a day earlier. The spot price is trading at $1196 per ounce in the European session. On the release front, it’s a very quiet day, with only one event, Flash Services PMI. No change is expected in this reading.
The euro hasn’t had much to cheer about lately, and the currency took a tumble on Friday, losing over 150 points. This was a result of remarks from ECB head Mario Draghi, who warned that that inflation expectations were declining to levels that were very low and said the ECB is ready to expand its stimulus program. Deep interest rate cuts haven’t boosted growth or inflation, so the ECB has reached deeper into its toolbox and purchased covered bonds and asset-backed securities. So far, these purchases have been from the private sector, but the ECB could decide to expand these purchases to government bonds, known has quantitative easing (QE). However, there is strong resistance to QE from national central banks, such as the powerful German Bundesbank.
XAU/USD is showing limited movement as the pair continues to trade close to the 1200 line.
On the downside, 1175 is providing strong support.
1200 has reverted to a resistance role as the pair has posted small losses.
Current range: 1175 to 1200. XAU/USD ratio is pointing to gains in short positions on Monday. This is consistent with the pair’s movement, as gold has posted small losses. The ratio has a majority of long positions, indicative of trader bias in favor of gold moving to higher levels.