- Market sentiment is fully neutral on Monday
- Bulls are aiming at 100-day SMA (1,148)
- Bears to face a strong demand cluster at 1,134/25
- Economic events to watch in the next 24 hours: FOMC Members Tarullo, Dudley, Evans and Williams Speak; US Personal Spending/Income (Aug) and Pending Home Sales (Aug); MPC Member Cunliffe Speaks
The growth of the US economy in the second quarter of this year was notably quicker than markets had previously anticipated, the second upward revision in a row showed on Friday. According to the Commerce Department, the US gross domestic product rose at a 3.9% annual pace in the three months from April to June, up from a 3.7% advance reported last month, whereas experts forecasted the reading to stay unchanged. In the meantime, consumer spending, which accounts for more than two thirds of the US economic activity, was revised up to a 3.6% growth pace from the 3.1% rate reported in August, helped by cheap gasoline prices and relatively higher house prices, which boosted households' wealth.
In the meantime, the recent data supports the case that the US economy may be gaining enough strength to withstand an increase of key interest rates from record low levels. Moreover, the Fed Chair Janet Yellen kept the door open to the hike this year in her speech on Thursday, as long as inflation remains stable and growth is strong enough to support employment. However, market participants are somewhat concerned that recent headwinds from China's slowdown could dampen the outlook for the further economic expansion of the world's biggest economy.
Upcoming fundamentals: Four FOMC members to speak on Monday
Monday is going to be a busy day in terms of speeches from monetary policy officials. Among them, four members of the Fed's FOMC committee will share their thoughts on monetary policy today. Federal Reserve Governor Daniel Tarullo will participate in a panel discussion at the Banque de France Conference in Paris. He will be joined by the Bank of England's Deputy Governor Jon Cunliffe. Meanwhile, New York Fed President will be interviewed by the Wall Street Journal, to discuss interest rates and inflation. Other speakers of Monday will include San Francisco Fed President John Williams and Chicago Fed President Charles Evans.
Gold slows down after Thursday's rally
The precious metal corrected slightly lower on Friday, following strong gains the metal had observed back on Thursday. However, bears are unable to push the price through the 61.8% Fibonacci retracement of the Aug-Sep downtrend and weekly pivot point at 1,142/41 so far. A failure at this cluster will change our outlook from neutral to negative. On the other hand, any future positive expectations require a consolidation above the 100-day SMA, currently at 1,148. Meanwhile, present neutral projections are supported by daily and weekly technical indicators.Daily chart
From the perspective of the one-hour chart an increase of the yellow metal's value seems to be more likely. XAU/USD has been forming a high-quality upward channel pattern. As soon as the price approaches the lower trend-line, we will expect the positive-sloping 200-hour SMA and 50% retracement to support bulls in the medium term.
Hourly chart
SWFX share of bulls at lowest level in 10 months
On the other hand, OANDA share of bulls rebounded from 57% to 59% of all positions, while SAXO Bank traders are keeping 60% of bullish trades on Monday.