Gold extends losses beyond 1,130

Source: Dukascopy Bank SA
  • Bears safeguard the sluggish majority of 51%
  • Consolidation below 1,125 will expose 1,117/15 and 1,100 areas
  • Aggregate signals from daily technical indicators are neutral on Wednesday
  • Economic events to watch in the next 24 hours: German Retail Sales (Aug) and Unemployment Rate (Sep); Italian CPI (Sep); Euro zone CPI (Sep) and Unemployment Rate (Aug); FOMC Member Dudley Speaks; Fed Chair Yellen Speaks; FOMC Member Brainard Speaks; FOMC Member Bullard Speaks; US ADP Non-Farm Employment Change; Canadian GDP (Jul); Japanese Tankan Manufacturing and Non-Manufacturing Index (Q3); Chinese Manufacturing and Services PMI (Sep)

© Dukascopy Bank SA
Changes in prices of commodities were quite strong on Tuesday, compared with insignificant currency fluctuations. The biggest loser of the day was natural gas, which fell 3.15% after a sharp surge in the preceding day. On the other hand, oil rallied almost 2% in the past 24 hours ahead of US inventory data on Wednesday. Both Crude and Brent were up by 1.8% and 1.9%, accordingly. Meanwhile, precious metals hovered around zero during the reported 24-hour period as silver added 0.3% and gold continued to slump by dipping 0.4% on day-to-day basis.

Industrial product prices in Canada reversed gains from last month in August, while raw material prices declined for the second month in a row, dropping the most since January. However, both readings were released better than anticipated by the markets. According to the Statistics Canada, the measure of industrial product prices fell 0.3% during the reported period, after rising 0.7% in July, whereas economists expected to see a larger drop of 0.5%. At the same time, the raw materials price index plummeted 6.6% on a monthly basis, following a downward revised decrease of 6% in the preceding month, while markets forecasted a 7.5% loss.


Negative changes for both indexes were mostly driven by lower prices for energy and petroleum products, which were down by 4.7%, the largest decline in seven months. Lower prices were also reported for chemicals and chemical products. Nevertheless, some part of decline was offset by higher costs of imported products due to depreciation of the Canadian Dollar. Meanwhile, dipping industrial and raw material prices could help the BoC to meet its 2% inflation goal. Other August data released earlier in the month revealed that Canadian core inflation eased to 2.1% from 2.4%, but still remained above the target of the Bank of Canada.

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Upcoming fundamentals: US ADP employment to show gains below 200,000 in September



According to forecasts for the upcoming ADP US employment report (12:15 GMT), the world's biggest economy generated 192,000 new jobs in September, up 2,000 on a monthly basis. Additionally, economists expect the Canadian economy to show an increase of 0.2% in July after a 0.5% jump one month before. This data is due at 12:30 GMT. Meanwhile, markets are waiting for China's PMI indicators for September to be revised tomorrow morning. Both official and Caixin readings for manufacturing and services sectors will be published at 1:00 GMT and 1:45 GMT, respectively.


Gold extends losses but fails to confirm support at 1,125

Despite the fact that the precious metal continued to slide in value on Tuesday, it was unable to register the daily closing price below an important support zone at 1,125. The price is required to consolidate below this area in order to refocus our attention on lower levels, namely the major 1,100 mark. Keeping in mind neutral signals from daily and weekly technical indicators, the bullish scenario is not considered to be dominant at the moment, while bears are likely to keep the price under pressure in the nearest future.

Daily chart
© Dukascopy Bank SA

The negative scenario is also shared by the gold's one-hour chart, where the spot is currently hovering below the 200-hour SMA for a second consecutive day. Considering that previously the price had remained above the moving average line since Sep 16, a recent move may imply a reversal of the bullion's trend to the downside.

Hourly chart
© Dukascopy Bank SA

SWFX sentiment is negative for second day

Distribution between bullish and bearish market participants at the SWFX market has been unchanged during the past 24 hours as bulls and bears continue holding 49% and 51% of all open positions, respectively.

On the other hand, OANDA bullish share spiked to 64.38% yesterday, while SAXO Bank traders are keeping 63% of bullish trades at the moment.
















Spreads (avg,pip) / Trading volume / Volatility


Average forecast for the end of this year is 1,160

Meanwhile, traders, who were asked regarding their longer-term views on gold between Aug 30 and Sep 30 expect, on average, to see the metal around 1,160 by the end of December. Though, 61% of participants believe the price will generally above 1,150 in ninety days. Alongside, only 24% of those surveyed reckon the price will trade in the range between 1,150 and 1,000 by the end of this year.

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