- Bears are now in the majority with 51% of all trades
- Closest demand is located at 1,125
- Medium term bearish targets are set at 1,100
- Economic events to watch in the next 24 hours: Spanish Retail Sales (Aug) and Flash CPI (Sep); German Prelim CPI (Sep); US Goods Trade Balance (Aug) and CB Consumer Confidence (Sep); Bank of England Governor Carney Speaks; New Zealand ANZ Business Confidence (Sep); Australian Building Permits (Aug)
Chinese industrial companies' reported profits fell the most in at least four years in August as the pillars of China's infrastructure-led growth model suffered from rising costs and persistent falling prices. The firms were also hurt by the stock market slump, which pushed down their investment returns, while the Yuan fluctuations increased companies' financial costs. According to the National Bureau of Statistics, industrial profits in the world's second largest economy tumbled 8.8% in August from a year earlier, with the biggest drops concentrated in producers of coal, oil and metals. Profits declined the most since the government began releasing such type of data in October 2011.
Household spending in the US rose at a healthy rate in August, while personal growth slowed after a jump in July. According to the Commerce Department, consumer spending increased 0.4% on a monthly basis in the reported month after an upwardly revised 0.4% rise in July, beating the estimate of a 0.3% gain. In both months the spending increases were led by strong gains in spending on durable goods including cars.
Upcoming fundamentals: BoE's Carney to speak on Tuesday
Governor of the Bank of England Mark Carney will give a speech on Tuesday at Lloyds in London. The event is expected to take place at 19:40 GMT, while markets are closely looking for any hints of the possible benchmark rate hike in the foreseeable future. In the meantime, the total number of building approvals in Australia is assumed to have declined by 1.8% in August after a confident 4.2% jump one month before. This data (1:30 GMT tomorrow) will be joined by Australian statistics on private sector credit.
Gold closes lower, losses to be extended on Tuesday
Fears of a US rate hike this year, fuelled by comments from FOMC officials on Monday, resulted in a sharp decline of gold prices. Bears managed to sustain losses Monday evening, when the bullion closed the session above 2014 low at 1,131. However, bearish momentum is being extended on Tuesday. A fall below the 1,125 mark (weekly S1, 38.2% Fibonacci retracement of Aug-Sep downtrend) is highly likely to pave the way down to 1,118 (55-day SMA) in the short term and the 1,100 area in the medium term. On the contrary to that, daily technical studies now project a rebound to take place.Daily chart
In the one-hour chart the yellow metal violated the lower trend-line of the bullish pattern yesterday due to the previously mentioned steep drop in price. The 200-hour SMA, currently at 1,134, was crossed to the downside as well. Risks are therefore skewed considerably in favour of short traders at the moment.
Hourly chart
Gold sentiment turns negative at SWFX market
On the other hand, OANDA share of bulls gained more ground yesterday to reach 60.41%, while SAXO Bank traders are keeping 62% (+2%) of bullish trades at the moment.