Financial markets in the United States were closed on Monday in observance of Martin Luther King Day. This greatly limited the number of market participants.Under these conditions, gold was traded slightly lower against the backdrop of a slight strengthening of the US dollar.
Market participants reacted guardedly to decrease IMF forecasts about the prospects for the majority of the world's major economies, including the expectations of a significant slowdown in China. Probably, the market will continue to refrain from taking action on the eve of important events, such as the meeting of the European Central Bank, which will be held on Thursday, as well as elections in Greece, scheduled for Jan. 25.
Despite the fact that the market is largely take into account the likelihood that the ECB will begin a program of purchases of sovereign bonds, some uncertainty in this matter. Still great uncertainty associated with the outcome of the elections in Greece. Both events can seriously affect the position of the metal, the prospects which, considering all the recent turmoil, remain positive.
From a technical standpoint, the metal is likely to retain a tendency to increase when trading above support at 1255.00 area where the 200-day SMA. In the short term, is expected to test the level 1300.00. Overcoming it and consolidation above target the metal to test the resistance 1345.00 and 1400.00.
Meanwhile, considering the increasing overbought immediate break above 1300.00 may not take place, and on the approach to be followed by this mark the transition to the correction, the purpose of which will be the area of 1255.00. However, only the reverse break and consolidation below this support will worsen the prospects for metal, paving the way towards reducing 1200.00.
Fig. 1. The daily chart
Eduard Kovalenko, analyst of company Admiral Markets