- Share of long open trades unchanged for a fourth day at 53%
- Bulls to defend important support at 1,108 (Weekly S1)
- Bearish risks increasing as price is testing 55-day SMA again
- Economic events to watch in the next 24 hours: Greek CPI (Aug); German 10-y Bond Auction; US JOLTS Job Openings (Jul); UK Manufacturing Production (Jul), Trade Balance (Jul) and NIESR GDP Estimate (3M-Aug); Canadian Housing Starts (Aug) and Building Permits (Jul); Bank of Canada Interest Rate Decision; RBNZ Interest Rate Decision and Monetary Policy Statement; Japanese Machinery Orders (Jul); Chinese CPI (Aug); Australian Employment Change and Unemployment Rate (Aug)
Gold traded above its lowest level in three weeks on Wednesday as the US Dollar weakened. Investors wait with great anticipation the Fed's meeting next week, when the US central bank should make a historic decision concerning its short-term interest rates. While the nation's labour market continues to improve to warrant a hike, the inflation outlook remains cloudy and the global economy underperforms. Hence, analysts remain divided about the odds of September rate hike. The World Bank's chief economist said that the Fed should delay raising interest rates until the global economy is more stable. A decision to not hike rates at the September meeting may support gold prices.
Meanwhile, recent turbulence in financial markets as well as worries about the Chinese economy hit Australian consumer confidence hard. The survey of 1,200 people by the Melbourne Institute in collaboration with Westpac Bank revealed its index of consumer sentiment fell a seasonally adjusted 5.6% in September, from August when it jumped more than expected by 7.8%. The index came in at 93.9 in the reported month compared with 99.5 points in August. Any reading below 100 shows pessimists outnumber optimists. This has been the case since May this year. Of the past 19 months, 17 have come in below 100 points.
Upcoming fundamentals: Bunch of data expected from UK, Canada, New Zealand, Australia, Japan and China in the next 24 hours
Wednesday is going to be rich of different fundamentals worldwide. In Britain manufacturing production (exp. +0.2%) and trade balance data for July will be released at 8:30 GMT. Later in the day there is going to be a NIESR UK GDP estimate for the three months through August. Meanwhile, the Bank of Canada and Reserve Bank of New Zealand will make their interest rate decisions today. The former will be announced at 14:00 GMT with change is projected, while the RBNZ (21:00 GMT) is likely to cut the benchmark rate by 25 basis points, down from 3% to 2.75%. In the meantime, China's annual inflation (1:30 GMT on Thursday) has probably picked up in August from 1.6% to 1.9%. Additionally, Australian labour market numbers will be due at 1:30 GMT tomorrow as markets see the jobless rate decreasing to 6.2% and employment change to remain positive in August.
Gold remains undecided around 55-day SMA
While both bulls and bears are awaiting important fundamental data on Wednesday, they decided to pause in the first two days of the week. Yesterday the bullion was broadly unchanged and the development was focusing on the 55-day SMA at 1,121. This mark attracts attention from both sides, thus keeping the price of gold under pressure. At the moment technical indicators on all time frames are showing bearish signals, anticipating that upcoming data can be good enough for gold to decline. Bears are currently watching the weekly S1 at 1,108, followed by a demand cluster just below 1,100.Daily chart
Gold narrowed its trading range in the past several days, meaning that the price is currently hovering near the upper boundary of the channel down pattern. Taking into consideration the present location of 200-hour SMA (1,129) and some of the closest resistances, our outlook is remaining fairly bearish.
Hourly chart
SWFX sentiment is marginally bullish
In the meantime, OANDA share of bulls surged to 65.77% of all positions, while SAXO Bank traders are keeping 65% of long open trades, down two percentage points from yesterday.