- Share of long open trades flat at 53%
- Bulls are intended to push the price back above 2014 low
- Bearish risks increased as price fell below 55-day SMA
- Economic events to watch in the next 24 hours: German Industrial Production (Jul) and Trade Balance (Jul); Chinese Trade Balance (Aug); Australian NAB Business Confidence (Aug)
Gold continued to decline for the fourth consecutive trading session on Monday, struggling near the lowest level in more than two weeks as US employment data failed to clarify whether the Fed will raise rates this month. US job growth unexpectedly slowed in August, even as unemployment rate declines to the lowest level in more than seven years. Nonfarm payrolls increased 173,000 last month as the manufacturing sector lost the most jobs since July 2013, following an upwardly revised 245,000 rise in July. At the same time, the US jobless rate dropped to 5.1% versus a more modest decline to 5.2% expected by economists. The unemployment rate reached the range that most Fed officials think is consistent with a low but steady rate of inflation. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reported a decline in holdings by 0.04% to 682.35 tonnes on Friday.
Meanwhile, even though Canada's job growth rose in August, the nation's unemployment rate climbed to the highest level this year as more people were looking for jobs. Canada's economy added 12,000 jobs last month, bolstered by a gain in full-time employment, Statistics Canada reported. Nevertheless, the gains were not sufficient to offset an increase of new people searching for employment, which lifted the jobless rate to 7.0% from 6.8%, where it held steady for six straight months. Economists had predicted the economy to lose 4,500 jobs in the reported month, while the unemployment rate to remain at 6.8%. One of the biggest concerns around Canadian employment remains whether the losses could potentially spread from the resource sector to other industries, especially in the energy-sensitive provinces like Alberta.
First China's trade balance after Yuan devaluation
Chinese trade balance data will be released tomorrow morning at 2:00 GMT. This will be the first exports and imports statistics after the People's Bank of China devalued the Yuan earlier last month. At the moment markets expect the surplus to widen from $43 billion in July to $48.2 billion in August of this year.
XAU/USD is under pressure from 55-day SMA
Gold was swinging between gains and losses on Friday. However, declining US unemployment rate put pressure on the precious metal and raised hopes the Fed will hike rates in September. As a result, XAU/USD fell marginally below the 55-day SMA and closed the trading session at 1,121. The bearish scenario is highly likely this week, as suggested by weekly technical indicators. We see some additional negative momentum to be built by the cluster of resistances around 1,130 as bears are aiming at the Aug 18 low of 1,109, followed by the major level at 1,100.Daily chart
If we assume that the bullion is currently hovering between two downward-sloping trend-lines in the one-hour chart, then the likelihood of losses is increasing even more. Bearish momentum should be reinforced by the 200-hour SMA at 1,130 and 2014 low at 1,131.
Hourly chart
SWFX sentiment remains marginally bullish
In the meantime, OANDA share of bulls rose to 63.55% of all positions, while SAXO Bank traders are currently keeping as many as 67% of long open trades.