Gold consolidates above 50% Fibo at 1,134

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Source: Dukascopy Bank SA
  • Bulls have a sluggish majority of 52% of all trades
  • 100-day SMA set to be the next important resistance to target
  • Daily indicators are giving an aggregate signal to acquire the precious metal
  • Economic events to watch in the next 24 hours: German Factory Orders (Aug); Eurogroup and ECOFIN Meetings, US Trade Balance (Aug); FOMC Member Williams Speaks; ECB President Draghi Speaks; Swiss CPI (Sep); Canadian Trade Balance (Aug); Bank of Japan Monetary Policy Statement

© Dukascopy Bank SA
On Monday a robust increase in value was posted by all but two major commodities included in our daily review. We could observe divergence between prices of precious metals as gold was down 0.25% (worst performer), while silver surged as much as 2.6% and turned to be the major beneficiary. Along with silver, oil prices jumped by more than 1.5% for both Crude and Brent types, while disappointing NFP numbers from the US are decreasing expectations for the first Fed rate hike in almost a decade. Meanwhile, the benchmark S&P GSCI Index traded in green yesterday, by gaining 1.5%.

Gold traded just below a one-week high on Tuesday as investors believed weak US nonfarm payrolls data would prompt the US central bank to postpone an interest rate hike. Non-interest-paying bullion had benefited from all-time low US rates. Yet expectations that the Fed will raise rates for the first time in nearly a decade has seen the precious metal lose about 4% of its value so far this year. Meanwhile, SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, saw a small outflow of 0.22 tonnes on Monday. That is the fund's first outflow in two weeks.


Meanwhile, New Zealand business confidence fell to its lowest level since March 2011 in the third quarter, with local companies predicting conditions to worsen in a tougher economic climate. According to the New Zealand Institute of Economic Research's Quarterly Survey of Business Opinion, a seasonally adjusted net 9% of firms now expect business conditions to deteriorate over the next six months, compared with a net 6% that had expected conditions to ameliorate in the second quarter. The decrease in confidence came in contrast to companies own trading activity. A seasonally adjusted net 12% of businesses reported an improvement in their own trading activity over the past quarter. Even more positive was the recovery in businesses' expected trading activity over the past quarter, with a net 17% expecting an improvement.

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Upcoming fundamentals: BoJ to decide, whether to increase stimulus amid low inflation



Last time the Bank of Japan maintained the monetary policy stance unchanged, keeping flat both the benchmark interest rate and the volume of asset purchases at 80 trillion yen a year. There are talks of action tomorrow, when the decision will be made in the morning. Even though the regulator believes advanced economies are growing at a healthy pace, additional inland monetary stimulus is possible due to low inflation and risks of economic recession in the country. In the meantime, analysts expect the US trade deficit to widen substantially, down from $41.9 billion in July to $47.6 billion in August. This data is due at 12:30 GMT on Tuesday.


Gold consolidates above 50% Fibo at 1,134

Following massive price changes on Friday, the yellow metal was broadly unchanged in the beginning of a new working week. Gold has therefore secured the positive future outlook, by stabilizing above the 50% Fibonacci retracement of the Aug-Sep downtrend. While this level is reinforced by the 2014 low and weekly PP at 1,131/30, this fact increases the probability of XAU/USD's bullish scenario even more. The nearest resistance to meet is the 61.8% retracement and 100-day SMA at 1,142/43, followed by the monthly R1 at 1,147. Meanwhile, daily indicators are also pointing to the upside at the moment.

Daily chart
© Dukascopy Bank SA

The 200-hour SMA is starting to reverse back to the north, and we expect this line to offer the bullion some extra support in the foreseeable future. Additionally, the price managed to consolidate above this moving average, which is currently hovering slightly above the 1,131 mark.

Hourly chart
© Dukascopy Bank SA

SWFX bullish share falls further to 52%

After considerable gains at the end of the previous trading week, the number of long open positions has recently resumed declining. During the past 24 hours their share dipped by one percentage point from 53% to 52%.

In the meantime, OANDA bullish share rebounded back above the 60% threshold to reach 63.13% by Tuesday morning. Similar case happened to SAXO Bank long traders as their majority also rose from 59% to 63%.















Spreads (avg,pip) / Trading volume / Volatility


Average forecast for the end of January 2016 is 1,160

Meanwhile, traders, who were asked regarding their longer-term views on gold between Sep 6 and Oct 6 expect, on average, to see the metal around 1,160 by the end of January. Though, 59% of participants believe the price will generally above 1,150 in ninety days. Alongside, only 25% of those surveyed reckon the price will trade in the range between 1,150 and 1,000 by the end of next year's first calendar month.

© Dukascopy Bank SA

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