- Bulls increased their majority of open positions in the market (56%)
- Bears are setting eyes on 1,100 after five days of losses
- Daily indicators suggest the bullion is too oversold at the moment
- Economic events to watch in the next 72 hours: Spanish Unemployment Change (Sep); Euro zone PPI (Aug); US Non-Farm Employment Change (Sep), Unemployment Rate (Sep) and Factory Orders (Aug), UK Construction PMI (Sep)
Among fundamentals, Swiss manufacturing activity decreased in September, just after its recent recovery in August, while retail sales in the Alpine economy dropped unexpectedly in August. The country's Purchasing Managers' Index dropped by 2.7 to seasonally-adjusted 49.5 points down from August's reading of 52.2. The figure was below the expected 51.8 points and also below the 50-points threshold, meaning that the sector is experiencing a contraction where it has been for most of 2015. At the same time, the output gauge plummeted to 49.1 points in September, down from 62.4 points in the prior month. As to the Purchase Price Index, it slid to 35.1 points in September down from August's 36.1 points.
Meanwhile, activity in China's all-important manufacturing sector continued to shrink during September, but at a slightly softer pace, as was revealed by two separate industry reports. The government's official gauge of factory activity improved, with the manufacturing index rising to 49.8 points in the reported month, up from August's three-year low of 49.7. Nevertheless, PMI measure stayed below the 50 level, marking two straight months of decline. At the same time, markets expected the index to remain at 49.7 in September. The second contraction in a row in the manufacturing sector is prompting fresh calls for China's government to add more stimulus, as the economy continues to display signs of weakness.
Upcoming fundamentals: UK construction sector to continue expanding in September
The average expectation suggests the UK Construction PMI indicator (8:30 GMT) will come in at 57.5 points in September, up on a monthly basis from 57.3 points in August. Therefore, this industry is likely to show continuous expansion as business conditions improve and the government is intended to support housebuilding in Britain. Meanwhile, US factory orders are due at 14:00 GMT on Friday. Following an increase of 0.4% in July, economists foresee the orders to drop of 0.9% in August.
Gold keeps trading in red, ready to test 1,105
On Thursday the yellow metal posted a minor decrease in price, but overall daily losses were extended to the fifth day in a row. The only bullish attempt to return back above the 23.6% retracement and 55-day SMA was strongly rejected. We expect to see the 1,105 level (weekly S2) being tested on Friday, and a lot will depend on the US jobs report later in the day. Positive numbers may trigger losses down to the 1,100 mark, which is guarded by the Sep low, lower Bollinger band and the long term downtrend line. Failure here would allow for a drop down to the monthly S1 at 1,089.Daily chart
The one-hour chart does not support any idea of a recovery at the moment. The price is located well below the majority of important technical levels including the 200-hour SMA, currently at 1,130. Bulls may rely on the major psychological mark of 1,100, in order to terminate losses and commence a rebound.
Hourly chart
SWFX bullish share jumps from 52% to 56%
Along with that, OANDA bullish share remains broadly unchanged at 69% on Friday, while SAXO Bank traders are also keeping the majority (65%) of bullish trades at the moment.