- 51% of open positions are long and 49% are short
- Rising support trend-line remains intact
- Strong intraday support is at 1,175 dollars
- Economic events to watch: US UoM Consumer Sentiment (Oct), Industrial Production (Sep), Capacity Utilization Rate (Sep), Canadian Manufacturing Sales (Aug), Chinese GDP (Q3), Industrial Production (Sep)
Gold traded below its 3-1/2-month high on Friday following better-than-expected US inflation data, which boosted the US Dollar. The precious metal was set to enjoy its biggest weekly rise in four weeks amid expectations the Fed will not raise interest rates this year. Investor sentiment towards the yellow metal improved, with holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rising 0.73% to 700 tonnes on Thursday, their highest since mid-July
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".
Prepare for Monday's Chinese data today
Today, the University of Michigan is to publish a report on the consumer sentiment in the United States, which is expected to improve to 88.8 upon the revised 87.2 for September. At the same time, industrial production in the world's largest economy is estimated to keep contracting, although at a slower pace in last month than in August, namely shrink by 0.2% after declining 0.4%. Additional risk events for commodities are scheduled for early Monday, when Chinese National Bureau of Statistics is to reveal growth in economic activity and change in output of manufactures.
Gold struggles to stay afloat
It is a critical moment for gold, as the precious metal is fighting to stay above the 200-day SMA in order to confirm a strong bullish signal and establish a new support area near 1,176. Yesterday, the monthly R2 at 1,181 failed to underpin the price, and the technical indicators except for a few studies refuse to support a bullish scenario. Still, the risks are skewed to the upside. If the bullion manages to consolidate atop the long-term moving average during the next few days, the first target will be the monthly R3 at 1,205, while in the longer-term perspective we will likely see a test of the key resistance at 1,230.Daily chart
Despite the resemblance between the hourly charts of EUR/USD and XAU/USD, the price of gold did not fall below the recently established trend-line, and it thus retain a good chance to keep advancing north unlike the Euro. Strong intraday support is at 1,175 dollars.
Hourly chart
Bulls and bears on equal ground
In the meantime, the portion of bulls at OANDA continues to decline. Their share fell from 52 to 49%, although two days ago 57% of open positions were long. A similar tendency is observed at SAXO Bank as well, where Wednesday's 60% share of bulls fell to the current 53%.