- Share of long trades is unchanged at 57%
- Bulls to set eyes on 2013 low at 1,178, immediate resistance at 1,159 (100-day SMA)
- Key demand lies at 1,131 (2014 low/55-day SMA)
- Economic events to watch in the next 24 hours: German Revised GDP (Q2) and IFO Business Climate (Aug), US Services PMI (Aug), CB Consumer Confidence (Aug) and New Home Sales (Jul), New Zealand Trade Balance (Jul), RBA's Governor Glenn Stevens Speech
The metal steadied below the highest level in seven weeks early on Tuesday as the Greenback recovered some losses against a basket of currencies while investors waited to see if there would be a second day sell-off in Chinese stocks. Meanwhile, US officials seem to have cooled the idea of hiking interest rates next month, as a stronger US Dollar, a weak Chinese Yuan as well as declining oil prices cloud the outlook.
Meanwhile, Lawrence Summers, a former Treasury Secretary, opposed an interest rate hike this year, as it may risk bringing some parts of the financial system into crisis and leading to unpredictable and dangerous outcome. One of the biggest areas of concern is inflation, which is below the Fed's 2% goal and according to Summers an interest rate lift-off could have a negative impact. Moreover, the higher borrowing costs will also increase the value of the US Dollar, which in turn will make "US producers less competitive and pressuring the economies of our trading partners."
Upcoming fundamentals: RBA chief to speak in Sydney, US home sales in focus
Today the US new home sales for July are due at 14:00 GMT. Analysts project the indicator for new single-family home sales to rebound from 482,000 in June to 512,000 in July on an annualised basis. At the same time, the Conference Board's consumer confidence index is forecasted to pick up to 92.8 points in August. Meanwhile, the Reserve Bank of Australia's Governor Glenn Stevens is going to speak at the National Reform Summit in Sydney tomorrow morning.
XAU/USD slid for first time in six days
Gold had been benefiting from its safe-haven status last week, as stock markets continued to decline around the world. However, falling oil prices are driving inflation outlook lower, which is a fundamental bearish factor for the bullion. Therefore, market failed to prevent losses on Monday and XAU/USD slipped below 100-day SMA and monthly R1 at 1,156/59. In case bulls are unable to reverse the bearish trend today, the metal's outlook is increasingly likely to become bearish again. However, daily indicators are now slightly more positive with respect to gold, hoping that the longs will make a breakthrough.Daily chart
In the one-hour chart the yellow metal is currently establishing a sideways trend, despite volatility we are observing in the daily chart. However, some support should be provided by the 200-hour SMA at 1,131, which has just crossed another demand represented by the 2014 low at 1,131.
Hourly chart
SWFX sentiment stays below 60% for tenth day
In the meantime, OANDA share of bulls stays at 60% (+3%) of all current positions, while SAXO Bank traders are also optimistic towards gold at the moment, as there are 58% (-4%) of long trades opened by Tuesday morning.