- Share of long open trades climbed to three-week high of 58%
- Bulls to refocus attention on 1,100
- Consolidation below weekly S1 at 1,108 will raise bearish risks
- Economic events to watch in the next 24 hours: Greek Unemployment Rate (Jun); US Unemployment Claims (Sep 4), Import Price Index (Aug) and Crude Oil Inventories (Sep 4); Bank of England Interest Rate Decision, Asset Purchase Facility and MPC Meeting Minutes
Gold traded near the lowets level in four weeks on Thursday amid robust US economic data and as outflows from bullion-backed exchanged traded funds damped investors' interest. US job openings hit the highest level on records in July, with employers having trouble filling openings, the latest sign of an increasingly tight labour market that could prompt the Fed to hike interest rates. Meanwhile, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped 0.61 percent to 678.18 tonnes on Wednesday, marking the biggest decline since August 12..
Meanwhile, The Bank of Canada kept its key interest rate on hold at 0.5% and said the nation's resource sector continues to adjust to lower prices for oil and other commodities. Policy makers maintained the benchmark rate on overnight loans unchanged after slashing it twice this year in January and July. While the central bank voiced concerns around China's growth prospects and noted the spill-over effects from lower oil prices on the rest of the economy, it underlined a recovery in Canada's exports coupled with unchanged inflation outlook. The BoC expects that economic growth will accelerate pace in the second half of the year, with the third quarter coming in around 1.5% and the final three months of the year advancing to 2.5%.
Upcoming fundamentals: Bank of England to keep rates flat
The Bank of England's Monetary Policy Committee will make a number of decisions on Thursday including the main interest rate and QE programme. Moreover, for the second time ever the BoE will release its meeting minutes at 14:00 GMT, along with other important data. At the moment experts project the MPC vote distribution to be unchanged, with one member voting in favour of hiking rates by 25 basis points. However, recent market turmoil may force the policymakers to refrain from any changes in the foreseeable future.
Gold hit by stronger Dollar, China comments
Stronger US Dollar and comments about possible additional market support in China pushed the safe-haven asset considerably to the south on Wednesday. Daily losses were the biggest since Aug 26 as the bullion dropped below the weekly S1 at 1,108, therefore falling more than $10 per ounce. Bulls should look for support from the major 1,100 level next, which is reinforced by weekly S2 and lower Bollinger band from below. Moreover, this area guards the next demand at 1,087 (monthly S1). Alongside, bearish sentiment is broadly supported by technical indicators on all time frames.Daily chart
The precious metal has finally decided to move away from the upper trend-line of the bearish pattern. The closest support to meet is the long term down-trend line around 1,100. In case bears send the price below this mark, we are going to watch the 1,080 area as the next medium term target.
Hourly chart
SWFX sentiment rebounded substantially
On the other hand, OANDA share of bulls decreased slightly to 64.62% of all positions, while SAXO Bank traders are keeping 68% of long open trades, up three percentage points from yesterday.