- SWFX traders trimmed their long positions and pushed the bullish share down to 55% (56% yesterday)
- Prices are underpinned by the 20-day SMA; initial bullish goal is the weekly R1 at 1,080
- Daily indicators deteriorated and are now giving a mixed outlook for gold
- Economic events to watch in the next 24 hours: French GDP (Q3); Italian Industrial Sales (Oct) and Retail Sales (Oct); US Durable Goods Orders (Nov), Crude Oil Reserves (Dec 18) and New Homes Sales (Nov); Swiss KOF Leading Indicator (Dec); UK Final GDP (Q3) and Current Account (Q3); Canadian Retail Sales (Oct) and GDP (Oct); BOJ Governor Kuroda Speaks
Gold traded in a tight range on Wednesday in a thin pre-holiday session. Trading is expected to be quiet amid limited liquidity ahead of the Christmas holiday. Meanwhile, the US economy grew at a slightly slower pace than initially expected in the third quarter. The nation's gross domestic product rose at a 2.0% seasonally adjusted annual rate in the three months through September, according to the Commerce Department, compared with initially estimated 2.1%. Economists, however, had expected a 1.9% expansion. The data suggests 2015 is on track to close out another year of steady growth, supported by an improving job market, robust home sales and pockets of wage increases.
Meanwhile, New Zealand trade deficit shrank more than expected in November as exports rose, while imports were also stronger. The nation's trade gap contracted from a revised $905 million in October to $779 million last month, Statistics New Zealand reported. Economists, however, had predicted a $810 million shortfall. For the twelve month through November 2015, New Zealand logged an annual trade gap of $3.7 billion, the highest since April 2009. Exports increased 1.0% to $4.01 billion in November, led by a 23% advance in meat and edible offal exports, whereas dairy products exports declined 3.3%. Analysts had predicted $3.90 billion worth of export receipts in November. Goods destined for China surged 17% on year in November, led by a 25% surge in milk powder, whereas exports to Australia dropped 4.1%. The deterioration in export income comes due to continuous weakness in global dairy prices. From a peak in early 2014 prices have plummeted over 50%. At the same time, imports jumped more than expected, soaring 12% over the reported period, driven by a 42% increase in capital goods and a 19% surge in consumption goods.
Upcoming fundamentals: US oil reserves to continue growing
The previous week's oil stockpiles in the US are likely to increase by 1.4 million barrels, according to the mean economists' estimates. Any number will follow a jump of 4.8 million barrels one week before. While the US has lifted a ban on oil exports, the inventories are now projected to start decreasing in the nearest future. Among other statistical data releases on Wednesday, the UK GDP and current account will be out at 9:30 GMT. The current account deficit is highly likely to widen in the third quarter 2015, up from 16.8 billion pounds to 21.3 billion pounds on a quarterly basis. Alongside, Britain's economic growth is forecasted to be confirmed at 0.5% quarter-on-quarter.
Gold corrects lower after two bullish sessions
The bullion ticked down in course of the trading session on Tuesday, after posting a confident rally on Friday and Monday. Yesterday's slump, however, was contained by the 20-day SMA at 1,072. Wednesday morning we are observing a marginal recovery up from the moving average. The key short-term supply is located at 1,080 (weekly R1), followed by a cluster of resistances at 1,086/89 (monthly PP, Bollinger band and current December highs). On the south side, some additional demand is still offered by the July low at 1,070.Daily chart
In the one-hour chart, the outlook for gold is moderately bullish at the moment. However, it is not guaranteed that the price will be able to stay above the 200-hour SMA (1,067), which was penetrated by the bulls on Monday. The uncertainty is reinforced by the fact that gold has largely ignored the moving average since the beginning of this month.
Hourly chart
Bears gain more ground despite losses
Meanwhile, the share of OANDA bullish transactions rose from 68% to 71% in the past 24 hours. An improvement was also in place for the SAXO Bank sentiment toward the precious metal where an increase of just one percentage point pushed the long portion up to 69%.