- Share of long trades unchanged at 54%
- Bulls to target 1,156 (100-day SMA) after crossing 2014 low
- Bearish interim goals are Aug 26/27 lows at 1,117
- Economic events to watch in the next 24 hours: Euro zone Manufacturing PMI (Aug) and Unemployment Rate (Jul); German Unemployment Change/Unemployment Rate (Aug); US ISM Manufacturing PMI (Aug); UK Manufacturing PMI (Jul); Canadian GDP (Jun, Q2)
Gold rose on Tuesday, but remained well below a key psychological level of $1,150 an ounce, as stocks faltered amid mounting anticipation that the Fed will most likely hike interest rates this month. The precious metal ended August 3.5% higher as concerns over China's cooling economy sparked safe-haven bids, although bullion has since come off the highest level in seven weeks. Growing indications that the US central bank could raise rates on its policy meeting on September 16-17 could limit the yellow metal's upside potential.
Meanwhile, the Reserve Bank of Australia kept interest rates on hold at 2% after the recent stock market turmoil as a weaker Australian Dollar and past rate cuts have a positive impact on growth. The central bank said the Australian Dollar was adjusting to the significant drops in key commodity prices. Since the August meeting, the Aussie has lost 2.5% versus the US Dollar and 1% on a trade weighted basis. Meanwhile, the price of iron ore, Australia's biggest export, has jumped 5%. At the same time, there have been signs that the Fed may postpone its widely anticipated September rate hike due to ongoing concerns about cooling China's economic growth and turbulence in global equity markets. Economists believe the longer the US central bank holds off lifting rates, the greater the chances of further easing from the RBA.
Upcoming fundamentals: Canadian economy to enter recession in Q2
Judging from the average economists' expectations, the Canadian economy will shrink by 0.9% in the second quarter of this year, calculated on a quarterly basis. Following a drop of 0.6% in the first three months of 2015, the country's economy is on the way to enter a technical recession. On the other hand, analysts see a GDP rebound of 0.2% in June a monthly basis, after the output contracted by the same amount back in May.
XAU/USD held above 2014 low
Despite attempts to move back below the 2014 low, the precious metal managed to hold above this important support and closed the trading session at 1,132. On Tuesday a stronger recovery is already taking place, while an immediate supply is represented by the weekly pivot point at 1,140. Still, bulls are expecting to push the price as high as 1,156 in the mid-term, where we may find the 100-day moving average. Bearish case is in turn complicated by the new placement of the monthly pivot point just in between 2014 low and 55-day SMA at 1,128.Daily chart
In the one-hour chart gold is currently testing the 200-hour moving average around the 1,140 level. With daily technical indicators giving signals to acquire the bullion, a move above the mentioned technical level seems quite likely in the next 24 hours. However, the future development will mainly depend on many important fundamentals from the US, which tend to have considerable influence on gold prices.
Hourly chart
SWFX sentiment remains marginally bullish
In the meantime, OANDA share of bulls is staying at 65% of all current positions at the moment, while SAXO Bank traders are keeping as many as 62% of long open trades.