- Share of long open trades unchanged for a third day at 53%
- Bulls to defend the closest support at 1,108
- Bearish risks increasing as price fell below 55-day SMA
- Economic events to watch in the next 24 hours: Euro zone GDP (Q2); US Labour Market Conditions Index (Aug) and Consumer Credit (Jul); Australian Home Loans (Jul) and Westpac Consumer Confidence (Sep)
Gold stabilized on Tuesday following a four-day decline as the Greenback eased. However, the precious metal traded close to its lowest level in more than two years as it struggled to find direction due to uncertainty about Fed's September rate decision. The US central bank meets next week, on September 16-17. Economists remain divided on whether the Fed will raise rates during its September meeting or postpone its rate hike decision to December. Yet, bullion prices have been falling markedly this year amid expectations the Fed will increase borrowing costs for the first time in nearly a decade.
Meanwhile, China's trade worsened in August, as both exports and imports dropped more than expected, fuelling further concerns over the health of the world's second biggest economy. Overseas shipments plunged 6.1% from a year earlier in yuan terms, following the 8.9% decline in July. In dollar terms, China's exports decreased 5.5% in the reported month, compared with the 8.3% decline in July. At the same time, imports in August plummeted 13.8% in dollar terms from a year earlier, compared with a 8.1% decrease in July. China's trade surplus widened in August to $60.2 billion from $43.03 billion in July.
Upcoming fundamentals: US consumer lending to decline in July
The total value of US consumer credit, which requires instalment payments, is estimated to decline from $20.7 billion in June to $18.4 billion in July. This data (to be released at 19:00 GMT) is closely correlated with consumer confidence and spending as better number indicates the willingness to spend money. It is worth pointing out that this indicator outperformed economists' expectations for the four out of five previous months. Along with that, the amount of new home loans in Australia is expected to increase by 0.8% in July, down from a 4.4% surge seen in June.
Gold completely flat amid low volatility
Despite some attempts to move above the 55-day SMA or below the 1,120 mark, the bullion remained flat on a daily basis and neither bulls nor bears gained control over the market. Therefore, XAU/USD has formed a rare Doji candlestick, as both opening and closing prices used to be the same. Moreover, the yesterday's development implies that the tools of technical analysis are unchanged, with daily and weekly indicators giving aggregate bullish and bearish signals, respectively. By hovering below the major supply area of 1,121-31, the bearish scenario still seems to be the most likely one.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 1,129 and 2014 low at 1,131.
Hourly chart
SWFX sentiment remains marginally bullish
In the meantime, OANDA share of bulls is flat at 63.56% of all positions, while SAXO Bank traders are still keeping as many as 67% of long open trades.