- Share of long trades decreased further from 58% to 57%
- Bulls are focusing on 2014 low at 1,131
- Key demand is now provided by monthly pivot point at 1,113
- Economic events to watch in the next 24 hours: French GDP (Q2), German GDP (Q2), Italian GDP (Q2), Euro zone GDP (Q2) and CPI (Jul), US PPI (Jul) and Industrial Production (Jul), Canadian Manufacturing Sales (Jun)
Gold declined on Friday after the Yuan firmed, while positive US retail sales data renewed expectations for a Fed rate hike as early as next month. Nevertheless, the precious metal was still poised to end its seven-week losing streak after China's currency unexpected devaluation earlier this week prompted investors to turn their attention to safe-haven assets. Bullion has gained almost 2% for the week so far, after a seven-week drop, which was the longest retreat since 1999.
US retail sales rose more than expected in July, as Americans increased purchases of automobiles and clothing, giving the US economy a boost in the third quarter. The upbeat data should strengthen the expectations of the Fed's interest rate hike as early as next month. Retail sales climbed a seasonally adjusted 0.6% in July from a month earlier, the Commerce Department reported. Excluding cars, sales rose 0.4% in July, the third straight month of solid gains. Consumer spending accounts for about 70% of economic output of the US, and thus is an important measure of the economy's vitality. Retail sales represent a significant share of overall consumer spending.
Upcoming fundamentals: Factory sales to climb in Canada
Canadian manufacturing shipments will be published along with US PPI at 12:30 GMT, while they are estimated to jump as much as 2.3% in June, following a sluggish 0.1% growth in the preceding month. In the meantime, Greek Parliament is finally going to vote on a bailout package agreed between the country and its creditors. The vote is assumed to be followed by the Eurogroup meeting later today.
XAU/USD corrects lower to 1,114
Gold declined on Thursday, as worries over China's Yuan further devaluation calmed down among market participants. The bullion's longest bullish streak since May was halted at the 1,124 mark and bears are regaining back momentum at the moment. Losses of Thursday were, however, limited by the monthly pivot point at 1,113. Recent price gains have also left several important supports below the current spot price, which may create difficulties for bears in the nearest future. The closest demand to watch is placed around 1,108, where weekly R2, 20-day SMA and Aug 12 opening level are located at the moment.Daily chart
The one-hour chart shows a rapid pace of XAU/USD's advance in value. Moreover, this graph indicates that the 2014 low is just within a short distance from the current market price. This level can be tested the next week, but longer-term gains are quite unlikely. Combined with Jul 20 high, the 1,131 mark may create substantial supply for the bullion.
Hourly chart
SWFX sentiment still below 60%
In the meantime, OANDA share of bulls stays at 66% of all current positions, while SAXO Bank traders are also firmly optimistic towards gold at the moment, as there are 65% of bullish trades opened by Friday morning.