- Bullish SWFX market share is flat at 52%
- Neither buyers nor sellers gained momentum; the result was a price standoff on Friday
- Daily technical indicators are showing slightly bullish signals on Monday
- Economic events to watch in the next 24 hours: German IFO Business Climate (Sep); Bundesbank Monthly Report; US New Home Sales (Sep) and Dallas Fed Manufacturing Business Index (Oct); UK BBA Mortgage Approvals (Sep) and CBI Industrial Orders Expectations (Oct); New Zealand Trade Balance (Sep)
In the meantime, gold traded near its lowest level in nearly two weeks on Monday amid a stronger US Dollar and as investors weighed the prospect for higher borrowing costs in the US against a cloudy global economic outlook before a Fed meeting this week. US central bankers begin a two-day meeting on Tuesday. Meanwhile, SPDR Gold Trust, the world's top gold-backed exchange-traded fund, said its holdings declined 0.26% to 695.54 tonnes on Friday.
Among other fundamentals around the world, The People Bank of China cut interest rates for the sixth time in less than a year, and it lowered the amount of cash that banks must hold as reserves in an attempt to kick-start growth in its slowing economy. The central bank lowered the one-year benchmark bank lending rate by 25 basis points to 4.35%, effective from October 24. The one-year benchmark deposit rate was also cut by 25 basis points to 1.50%. Reserve requirements for all banks were slashed by 50 basis points, with an additional 50 basis point reduction for some institutions.
Meanwhile, Canada's inflation cooled more than expected in September amid a steep fall in gasoline prices. The consumer price index climbed 1% last month from a year earlier, marking the tenth consecutive month it has been below the Bank of Canada's 2% inflation target, Statistics Canada said. Gasoline prices plummeted by 18.8% in the 12 months to September following the 12.6% plunge in August. In the prior two months, the gauge rose 1.3%. The core inflation, which excludes volatile components such as gasoline, tobacco and mortgage interest remained at 2.1%.
Upcoming fundamentals: UK manufacturing industry to see new orders declining
The Confederation of British Industry will release its order expectations' indicator for October of this year at 11:00 GMT. The reading is likely to come in at -8 points after -7 points in August, meaning that British producers will forecast the new orders to slump in the next three months. This indicator stood below zero since May 2015. Apart from UK data, the trade deficit in New Zealand (22:45 GMT) will most probably show a moderate decrease for September, down from N$1,035 million to N$822 million on a monthly basis.
Gold unchanged amid lack of strong momentum
Even though the yellow metal's trading range was reaching $20 per ounce on Friday, neither bulls nor bears eventually managed to take control of the market. Gains were being extended above the 200-day SMA and Aug high, but no consolidation took place. The near term outlook is therefore undecided with respect to the bullion. Only a confident spike above 1,173 would refocus our attention back to the north. From the other side, bears are targeting the 1,158/55 zone (20-day SMA/weekly S1), which is followed by even more important demand at 1,147/46 (monthly R1/weekly S2).Daily chart
Gold eroded all gains from Friday's first part of the day, when the People's Bank of China announced a key rate cut and a decrease of reserve requirements for banks. Thus, the precious metal returned back into the boundaries of the bearish channel. We expect a continuous decline, which should be reinforced by 200-hour SMA and Aug high.
Hourly chart
SWFX sentiment unchanged at 52%
Meanwhile, OANDA's positive market sentiment improved from just over 50% last Friday to 52.66% by Monday morning. In addition, 56% (55% on Friday) of SAXO Bank clients continue to assume that the precious metal is going to gain value.