- Share of long trades decreased from 57% to 56%
- Bulls waiting for momentum from 2014 low
- Bears to push the price through 1,130/25 support zone
- Economic events to watch in the next 24 hours: US Durable Goods Orders (Jul) and Crude Oil Inventories (Aug 21), FOMC Member Dudley Speaks
Gold failed to hold early gains and extended Tuesday's 1.2% decline after global equities stabilized following China's decision to cut interest rates and bank reserve requirements. However, stocks resume their decrease in Asia on Wednesday as investors remained concerned China's move would not be enough to support its slowing economy or halt the stock market collapse. Yet, investors' fears failed to switch appetite back to the precious metal, typically seen as a safe haven in times of uncertainties and market turbulence.
Meanwhile, US consumer confidence rose more than expected in August to the second-highest level in eight years as Americans held a more favourable view of the labour market. According to the Conference Board, the consumer confidence index surged to 101.5 this month, from a revised 91.0 in July. The present situation index, which measures current conditions, increased to a post-recession peak of 115.1 from 104 in the previous month. The future expectations index soared to 92.5 from 82.3. The share of Americans, who viewed jobs as "plentiful" rose from 19.9% in July to 21.9% in August, hitting the highest level since January 2008. Those who viewed jobs as "hard to get" plunged from 27.4% in July to 21.9% in August. Analysts predicted the advance in consumer confidence should support more robust consumer spending in coming months, thereby helping the economy strengthen further.
Upcoming fundamentals: US stockpiles' data may trigger new losses for oil today
On average, crude oil inventories in the world's largest economy are forecasted to grow by one million barrels for the week ended Aug 21. This number will follow a surprising jump in stockpiles one week before, when they climbed 2.6 million barrels. Therefore, oil prices' recovery seems to be at risk on Wednesday. In the meantime, gold is likely to register some turbulence in time US durable goods orders are released by 12:30 GMT today.
XAU/USD enters bearish correction
XAU/USD has been losing value for a third consecutive day on Wednesday. A decline started Monday, when the bullion received bearish impetus from the 100-day SMA at 1,160. At the moment the price is fluctuating around 1,136, namely five dollars above a major demand area composed of 2014 low, 55-day SMA, 20-day SMA ad weekly S1. We would allow a drop below this cluster of supports, which will confirm the bullion entering a correction phase. Nonetheless, daily indicators assume the metal will receive positive momentum from the mentioned bunch of technical levels.Daily chart
In the one-hour chart the price of gold has just met a significant support line in face of the 200-hour SMA at 1,134. Together with the 2014 low at 1,131 the moving average may reverse the precious metal to the upside. However, a consolidation below both of these levels will mean a correction is inevitable in the nearest future.
Hourly chart
SWFX sentiment stays below 60% for 11 days
In the meantime, OANDA share of bulls stays at 59.38% of all current positions, while SAXO Bank traders are also optimistic towards gold at the moment, as there are 63% (+5%) of long trades opened by Wednesday morning.