- Long traders saw their market share plummeting to 31%, the lowest level ever registered by our review
- October 2015 high at 1,191 is the first support to offer bullish momentum for gold on Tuesday
- On aggregate, daily technical indicators are bullish; MACD is the only one pointing downwards
- Economic events to watch over the next 24 hours: Italian Trade Balance (Dec); German ZEW Economic Sentiment (Feb); US Empire State Manufacturing Index (Feb); FOMC Members Harker, Kashkari and Rosengren Speak; UK CPI and PPI (Jan); Canadian Manufacturing Sales (Dec)
Gold continued to fall on Tuesday, trading considerably below a one-year high reached last week as a recovery in global equities and renewed risk appetite undermined demand for the safe-have asset. China's return from a week-long holiday failed to support the yellow metal. World stocks advanced sharply on Monday as China's central bank fixed the Yuan at a much stronger rate and oil rose, fanning fears of global deflation.
New Zealand retail sales volume rose less than expected in the final three months of 2015, as a decline in motor vehicle sales offset gains in hardware supplies. The volume of retail sales climbed 1.2% in the fourth quarter compared with the previous three months, following a downwardly revised 1.5% pace in the September quarter and compared with a median forecast for an increase of 1.4%. Measured on an annual basis, volumes rose 5.3%, down from the 5.7% pace in the year to September 2015. Hardware, building and garden supplies retailing registered the biggest volume increase in the reported period, surging 5.3%. However, a 1.7% decline in motor vehicle and parts sales from a peak hit in the preceding quarter dragged down the overall figure. Core retail sales, which exclude volatile vehicle-related industries, climbed 1.4% in the fourth quarter. New Zealand consumer spending is being supported by record migration and tourism, low interest rates and a robust housing market. That is helping the nation's economy to offset weaker returns for commodities as prices for dairy products, the country's largest goods exports, remains low. Separately, business managers expect inflation to be 1.63% annually over the next two years, down from 1.85% in the quarter. This was the lowest level since the second quarter of 1994.
US retail sales climbed slightly in January, rising for the third consecutive month, evidence that Americans kept shopping despite steep declines in equity prices. According to the Commerce Department, retail sales increased a seasonally adjusted 0.2% last month, the same as in December. Excluding the effect of falling gas prices, sales increased 0.4%. Americans boosted their purchases in January of autos, home supplies and groceries, and spent more online. Greater job security, rising wage growth and falling gasoline prices may be encouraging more consumers to loosen their purse strings after a fourth-quarter slowdown. A pickup in household purchases, which makes up the lion's share of the economy, would help the US prevent the negative effects of a strengthening US Dollar, weak foreign demand and tumultuous financial markets. Continued improvement in the labour market is keeping Americans spending. US employers added 151,000 to payrolls in January after expanding headcounts by 262,000 the in the prior month. In addition to that, average hourly earnings increased 2.5% in the 12 months ended January following a 2.7% gain in December that was the most since 2009. Consumers are the engine that has been powering the US economy for the past two years as they account for roughly 70% of GDP.
Upcoming fundamentals: Three members of FOMC to speak on Tuesday
The number of speeches by FOMC members has never been high enough, as markets are always delighted to hear different views about monetary policy in the world's largest economy. The first one to take the stage throughout Tuesday will be the Philadelphia Fed President Patrick T. Harker. He is the alternate FOMC member in 2016, as he is going to talk on the US economy at 13:30 GMT at the University of Delaware. Alongside, the Minneapolis Fed President Neel Kashkari will deliver a speech on fiscal and monetary policy at Brookings at 15:30 GMT. This is going to be this alternate FOMC member's first public speech. In the meantime, a 2016 voting FOMC participant Eric Rosengren from the Boston Fed is set to talk at Colby College in the midnight GMT on the topic called "Prospects for Returning to a More Conventional Monetary Policy."
Gold continues to slide as markets grow
Yesterday markets were encouraged by dovish comments made by ECB President Draghi, while equities and many commodities rallied. Gold has therefore closed below the first target, namely monthly R3 at 1,209. Tuesday morning we are observing more selling pressure, which is pushing prices towards the October 2015 high at 1,191. By violating this initial daily support for today, the bullion will be in a good position to plummet down to the Feb 10 low at 1,181.50, followed by the bunch of demand levels between 1,170 and 1,164 (Aug 2015 high; monthly R2; 20-day SMA).Daily chart
Gold is playing with the 200-hour SMA in the one-hour chart at the moment. XAU/USD has been unable to trade below the moving average since January 20, meaning any drop below here today would have considerable bearish implications. We are additionally looking at the August 2015 high (1,170), which can become a trigger of a revival.
Hourly chart
SWFX sentiment crashes to all-time observed low
On the other hand, some turbulence in the SWFX market used to put little pressure on OANDA and SAXO Bank markers. In fact, the bullish market share increased from 56% to 56.76% in the OANDA market, while adding almost two percentage points to 58% in terms of SAXO Bank long trades.