- 52% of positions are long and 48% are short
- Emerging rising wedge in the hourly time-frame
- If the price dives under 1,162 dollars, the 200-hour SMA at 1,147 should be tested next
- Economic events to watch in the next 24 hours: US (Core) Retail Sales (Sep), (Core) PPI (Sep)
Gold rose for the fourth straight trading session, reaching a fresh three-month high, supported by a weaker US Dollar and comments from Fed officials arguing against an interest rate hike this year. Fed Governor Daniel Tarullo said the central bank should refrain from raising interest rates this year, in comments that showed sharp divisions within the Fed over the US economy's readiness for higher rates.
Also, bullion received support from the Greenback, which traded near the lowest level in more than three weeks versus a basket of major currencies, as further signs of slowdown in the Chinese economy fuelled speculation that the Fed will have to wait longer to start policy tightening.
Senior market analyst with Cambridge Global Payments, David Starkey, says that the expectations for inflation number this week are for "mildly deflationary reading". He adds that "the extremely negative non-farm payrolls eliminate the possibility of October rate hike" and that in fact there is almost no chance of a rate hike this year. David explains that "it is difficult to argue for tighter monetary policy when the labour sector is not performing and there is deflation in the economy".
Chinese inflation cools; US core retails sales to drop
Early in the morning Chinese National Bureau of Statistics reported that inflation in the world's second biggest economy decreased to 1.6% in September from 2.0% in August. As for the data from the United States later today, the expectations are that the retails sales excluding automobiles will decline by 0.1% in September after a 0.1% rise a month earlier. And while the headline figure should show the same 0.2% growth as before, producers' price index will also drop according to the consensus, but by 0.2%. If the estimates are true, this could push the rate hike even further into the future.
Gold charges at 200-day SMA
The price of gold managed to exceed its August maximum early this morning, but further appreciation of the yellow metal seems doubtful. During its latest rally XAU/USD did not encounter any notable resistances, and now it is facing a cluster formed by the 200-day SMA and monthly R2 among others. Moreover, the technical indicators are mixed, saying the momentum is too weak right now to pierce such an obstacle. Accordingly, we expect a sell-off in the nearest future, and there could be a decline down to 1,150 (monthly R1) before the price stabilises.Daily chart
The hourly chart gives even more reasons in favour of a bearish outlook, at least in the short run. Just like EUR/USD, the price of gold appears to be forming a rising wedge, implying that the metal is overbought and is ready for a significant decline. Once the price dives under 1,162 dollars, the 200-hour SMA at 1,147 should be tested next.
Hourly chart
Dukascopy clients remain net neutral
Sentiment in the SWFX market significantly differs from the distribution between the longs and short at OANDA and SAXO Bank. About 57% of traders of the Canadian-based broker are long the bullion, which is comparable with 60% of traders being bulls at SAXO Bank.