Gold keeps hovering above 1,130

Source: Dukascopy Bank SA
  • Share of long open trades retreated further from 57% to 56%
  • Bullish traders to set eyes on 100-day SMA and 61.8% retracement
  • Bearish case to be complicated by strong demand zone at 1,134/24
  • Economic events to watch in the next 24 hours: US Housing Price Index (Jul); FOMC Member Lockhart Speaks, Swiss Trade Balance (Aug); UK Public Sector Net Borrowing (Aug); Chinese Caixin Manufacturing PMI (Sep)

© Dukascopy Bank SA
Gold was the worst performer among all major commodities on Monday. It slumped by 0.44% amid strength of the US Dollar, which rallied after hawkish comments from several FOMC members. On the contrary, silver avoided losses and managed to gain 0.1% yesterday. On the positive side, oil prices rebounded 2-3% in the past 24 hours as US oil-rig count fell last week, posting the third straight weekly decline.

Gold traded near its highest level in three weeks on Tuesday, as Asian equities and US Dollar rose and amid investors' concerns over the possibility of US interest rate hike later this year. SPDR Gold Trust, the world's biggest bullion-backed exchange-traded fund, saw its holdings falling 0.53% to 674.61 tonnes on Monday, marking the first drop in nearly two weeks. Comments from Fed officials suggested that the US central bank could still raise rates later this year, a move that could dent demand for non-interest-paying gold.

Meanwhile, US home resales dropped more than predicted in August, marking the first decline in four months, with higher home prices putting off buyers. Sales of previously owned homes plunged 4.8% last month to a 5.31 million seasonally adjusted annual rate, the National Association of Realtors reported. Economists, however, had projected sales to decline 1.1% to a seasonally adjusted annual rate of 5.53 million. Sales of single-family homes tumbled 5.3% in August, while sales of condominiums and co-ops dropped 1.6%. The decrease might be due to rising prices putting off potential buyers. The median home price hit $228,700 in August. That was up 4.7% from a year earlier, but left the annual rate at its lowest level since August 2014.


At the same time, Australian consumers appeared to cheer the change of leadership in the Liberal Party with an increase in confidence over the previous week. The ANZ-Roy Morgan weekly consumer confidence index rose 8.7% from 105.3 to 114.5 in the week ending last Sunday, indicating Australians were confident under the newly-elected Prime Minister Malcolm Turnbull than the ex-Prime Minister Tony Abbott. Views on the one-year outlook for the economy surged 25.8%, leaping by 21.1 points to 102.8 last week, which was the second-largest one-week gain since the consumer-confidence series began in 2008. For the Australian economy five years from now, the index surged 13 points to 110.1. Respondents also welcomed the idea of buying a large household item, with the index up 3.7 points to 123.1.

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Upcoming fundamentals: China's production sector to remain weak in September



Tomorrow morning the Chinese manufacturing PMI will be released at 1:45 GMT as economists foresee the indicator to stay way below the 50-points' threshold, which divides an expansion from contraction in activity. An average projection says the PMI will advance from 47.3 to 47.6 points. In the meantime, the UK public sector net borrowing (8:30 GMT) is assumed to fall substantially on the annual basis, down from 10.9 billion pounds in August 2014 to 8.7 billion pounds the same month this year.


Gold keeps hovering above 1,130

Bears attempted to gain control over the market, but they managed to push the price of gold only below the first important support, namely the 50% Fibonacci retracement of Aug-Sep downtrend at 1,134. The closest demand zone is therefore remaining intact as 2014 low and weekly/monthly pivot points are ready to provide the bullion with positive momentum in the nearest future. Bulls are still aiming at 100-day SMA/61.8% retracement at 1,141/42, but any failures there may trigger losses and send XAU/USD even below 1,124 over the medium-term.

Daily chart
© Dukascopy Bank SA

In the one-hour chart the precious metal has clearly showed no major developments as it remains above the most important support, namely the 2014 low at 1,131. From the bearish side, both 61.8% retracement and Sep 18 high are considered as resistances to be watched closely as they are capable of creating downward momentum for the short traders.

Hourly chart
© Dukascopy Bank SA

56% of SWFX traders see gold higher

SWFX sentiment with respect to gold is broadly bullish at the moment, even though the share of longs decreased by one extra percentage point to 56% from yesterday.

In the meantime, OANDA share of bulls slipped from 65.18% to 63.70% of all positions, while SAXO Bank traders are keeping 64% (+1%) of long open trades.
















Spreads (avg,pip) / Trading volume / Volatility


Average forecast for the end of this year is 1,170

Meanwhile, traders, who were asked regarding their longer-term views on gold between Aug 22 and Sep 22 expect, on average, to see the metal around 1,170 by the end of December. Though, 61% of participants believe the price will generally above 1,150 in ninety days. Alongside, only 23% of those surveyed reckon the price will trade in the range between 1,150 and 1,000 by the end of this year.

© Dukascopy Bank SA

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