- Share of long open trades declined from 59% to 57%
- Key resistance area is created by 55/20-day SMAs at 1,115/17
- Movements likely to remain muted before Fed meeting
- Economic events to watch in the next 24 hours: Euro zone CPI (Aug); US CPI (Aug) and Crude Oil Inventories (Sep 11); UK Claimant Count Change (Aug), Average Earnings (Jul) and Unemployment Rate (3M-Jul); Swiss ZEW Survey (Sep); Canadian Manufacturing Sales (Jul); New Zealand GDP (Q2); Japanese Trade Balance (Aug)
Gold traded in tight range near its lowest level in a month, as investors awaited Fed's decision on US interest rates on Thursday. Members of the FOMC start a crucial two-day meeting later in the day. The uncertainty over the timing of a rate increase has weighed on gold all year, pushing the precious metal down over 6%. Higher rates could sap demand for non-interest-paying bullion, while boosting the US Dollar.
Meanwhile, US consumer spending rose in August at a healthy pace, suggesting a strong domestic demand that could prompt Fed policy makers to raise interest rates on Thursday. According to the Commerce Department, sales at retail stores and restaurants climbed a seasonally adjusted 0.2% in the reported month, following a revised 0.7% growth in July. At the same time, core retail sales inched up 0.1%. Measured on an annual basis, retail turnover increased 2.2% in August. Consumer spending accounts for around 70% of economic activity in the US and represents a key gauge of the economy's health. Retail sales represent a major piece of overall consumer spending. Robust spending in the spring helped the world's number one economy expand at an annual rate of 3.7% in the second quarter. A separate report from the Commerce Department showed that broad-based consumer spending increased 0.3% in July, roughly the same pace as June.
Upcoming fundamentals: New Zealand Q2 economic growth to be revised upwards
Analysts project the New Zealand economy to add 0.5% in the second quarter of this year (release at 22:45 GMT), while in the previous three-month period the data showed an increase of just 0.2% amid lower rural production. In the meantime, UK unemployment rate is set to be flat at 5.6% in the three months through July. Economists also see the number of claims for jobless benefits decreasing by 5,100 in August, while wages are likely to continue surging with an annual pace of 2.5%. The ONS will publish all of these indicators by 8:30 GMT today.
Gold in wait-and-see mode before Fed decision
Neutral expectations for gold are currently being confirmed by the real price development. On Tuesday the bullion reflected Friday's move by showing a minor bounce back from the weekly pivot point at 1,110. However, neither bulls nor bears have any stronger influence on the precious metal at the moment. Neutral outlook is retained for Wednesday, the first day of the Fed meeting. Some increased turbulence is expected only by Thursday evening, while daily and weekly technical indicators are giving signals to acquire gold.Daily chart
In the one-hour chart, the precious metal continues to hover below the upper trend-line of the bearish pattern. The closest support to meet is the major psychological level of 1,100, which has already been touched on Friday.
Hourly chart
SWFX sentiment worsened for the first time in four days
In the meantime, OANDA share of bulls advanced further to 64.88% of all positions, while SAXO Bank traders are keeping 67% of long open trades, no change for the past two trading days.