- Portion of SWFX bulls is little changed at 71% (72% yesterday)
- Bulls are pushing gold prices higher as analysts see Fed December rate hike already priced into markets
- Aggregate daily technical indicators expect gold to continue going down
- Economic events to watch in the next 24 hours: German Bundesbank President Weidmann Speaks; Euro zone Current Account; ECB Monetary Policy Meeting Accounts; US Unemployment Claims (Nov 13), Philadelphia Fed Manufacturing Index (Oct) and Natural Gas Inventories (Nov 13); FOMC Members Lockhart and Fischer Speak; Swiss Trade Balance (Oct); UK Retail Sales (Oct); Canadian Wholesales Sales (Sep)
Gold climbed off the lowest level in more than five years on Thursday, as the US Dollar fell. US housing starts dropped to the lowest level in seven months in October, while a surge in building permits signalled the housing market remained on firm footing. Meanwhile, the minutes of the FOMC meeting in October reinforced the view that the Fed may finally hike interest rates as soon as next month, given job growth and inflation trends remain resilient and continue to improve. Yet, Fed officials remain divided, as some policy makers doubted that economic data available by the December meeting would warrant raising the target range for the federal funds rate.
Meanwhile, the Bank of Japan maintained its monetary policy, hoping that an economic recovery is around the corner despite soft domestic capital expenditure and uneasy global business conditions. As widely expected, the central bank reiterated its pledge to increase base money at an annual pace of 80 trillion yen through purchases of governments bonds and risky assets. The BoJ has kept monetary policy unchanged since expanding stimulus in October last year, even as falling oil prices and weak exports push Japan's inflation further away from its goal. The BoJ repeated its view that the world's third biggest economy continued to recover moderately, although production and exports have been hit hard by the slowdown in emerging markets. The central bank admitted that an annual change in the consumer inflation is likely to be around 0% for the time being, due to the effects of the energy prices drop.
The Swiss National Bank reiterated its view that the Swiss Franc is considerably overvalued, despite spending hundreds of billions of francs on interventions to push the nation's currency lower. A strong Franc is expected to further hit Swiss exporters, who have already been suffering. Earlier in the year the central bank surprisingly abandoned its ceiling on the Franc of 1.20 per Euro, triggering a massive turbulence in the global markets. Moreover, economists suppose that the SNB may intervene in the FX markets in order to limit the appreciation in the Franc in case the European Central Bank deploys further stimulus. Euro zone stimulus could further hamper efforts to keep the Swiss Franc at its current 1.08 franc level versus the Euro, and expectations for the Franc to strengthen against its key trading partners' currency increased.
Upcoming fundamentals: UK retail sales to drop in October after strong September data
Analysts see the volume of retail sales in Britain to slump by 0.4% in October on a monthly basis. Data will be published at 9:30 GMT and will follow a strong 1.9% pick up in September, which happened due to Rugby World Cup that took place in the UK. Meantime, an important manufacturing index from the Federal Reserve Bank of Philadelphia has probably advanced above zero in October, up to 0.1 points from -4.5 in September. The reading above zero indicates improving conditions in the production sector of Philadelphia region, and vice-versa. Today additional potential gold movers include speeches from two Fed officials later in the day. Atlanta Fed President Dennis Lockhart and Fed Governor Stanley Fischer are due to talk in Atlanta and San Francisco, respectively. Questions to both of them are expected.
Gold rallies above 1,075 post-Fed
Gold was fully unchanged in value yesterday, with both bulls and bears failing to establish a lead after minutes of the latest FOMC meeting. Today we see the Dollar weakening and this situation is benefiting the precious metal. Still, bulls are far away from putting gold on a stable path of recovery. Only a climb above 1,100 is going to refocus attention back on the northern side. Short traders, however, are getting ready to push XAU/USD below the July low at 1,070 and we expect this happening in the nearest future. Success here would allow for losses down to 2010 low at 1,044.Daily chart
XAU/USD returned above the lower boundary of a bearish channel. In case the price continues to develop upwards, it will inevitably meet the 200-hour SMA at 1,084 in the next few hours of trading. There, bearish pressure may win again and reverse positive trajectory, as it has already happened in the beginning of this working week.
Hourly chart
SWFX bullish share stays firmly above 70%
A huge advantage of long traders is also true for the OANDA market at the moment as bullish share was raised from 73.9% to 74.7% by Thursday morning. Additionally, around 69% of SAXO Bank clients preserve their positive stance with respect to gold.