- Moderately optimistic ADP employment sent gold down; long positions rose from 50% to 54%
- Core attention switches to Friday payrolls statistics as Dollar bulls set eye on 1,100
- Daily technical indicators are mixed on a daily basis
- Economic events to watch in the next 24 hours: Euro zone Retail Sales (Sep); European Commission Release Economic Growth Forecasts; ECB President Draghi Speaks; US Unemployment Claims (Oct 30) and Non-Farm Productivity (Q3); FOMC Members Dudley, Fischer and Lockhart Speak; Bank of England Interest Rate Decision, Asset Purchase Facility and Quarterly Inflation Report; BOE Governor Carney Speaks
US private employers created more jobs than expected in October, suggesting steady improvement in the US labour market. Companies added 182,000 workers in the reported month, following a revised 190,000 increase in the preceding month, according to the ADP Research Institute. The median projections of economists called for a rise of 180,000. The ADP data comes ahead of the US Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment. Economists predict total US employment to have increased by 180,000 jobs in October, compared to the 142,000 created in September. The unemployment rate is expected to remain unchanged at 5.1%.
Meanwhile, Reserve Bank of Australia Governor Glenn Stevens explicitly said that the next monetary policy move is more likely to be an interest rate reduction than a hike. The South Pacific economy is undergoing a large growth transition out of mining boom, with monetary policy helping to rebalance the growth. Therefore, an accommodative stance is appropriate for some time yet, Stevens said. The RBA maintained rates on hold this week, indicating it may cut official cash rates further from the current all-time low of 2%. Stevens welcomed the progress the Australian economy has already made in coping with the mining boom. Nevertheless, the Governor warned that Chinese economic growth was uncertain and presented a challenge for Australia's miners in an environment with lower demand for commodities. Financial markets are now pricing in a 32% chance of a rate cut in December, down from 70% before the central bank's decision to keep rates on hold.
Canada's trade deficit narrowed in September amid increasing exports of consumer goods and energy products and as imports declined for the first time in five months. The trade gap declined to a deficit of C$1.73 billion, beating analysts' expectations for a deficit of C$1.90 billion. Exports climbed 0.7% to C$44.5 billion with volumes rising by the same amount as prices were unchanged. In August, outbound shipments plunged 2.9%. Meanwhile, imports declined by 1.3% to $46.2-billion, due to a 14.3% drop in metal and non-metallic minerals and a 12.3% decrease in energy products. Exports advanced 4% over the three months through September, compared with the 2.4% increase of imports. After stripping out short– term price changes, exports climbed 2.9% and imports fell 0.2%, Statistics Canada reported.
Upcoming fundamentals: Another Super Thursday in the UK
The most important fundamental event is assumed to be meeting of the Bank of England today. Economists are watching several important moments today. At first, it is important to know whether the split of 8-to-1 among MPC members will change today. Secondly, the Bank of England will release new expectations for economy and consumer prices in its fresh Quarterly Inflation Report. At last, comments from Governor Mark Carney may substantially change odds in favour of a rate hike sooner rather than later. At the moment more than 50% of market participants see the beginning of the tightening cycle in May 2016.
Gold closed at Oct 2 low; 1,100 level to be next
The bullion is now declining for six consecutive days. Since Wednesday of the previous week gold has lost around $60 per ounce in its price, while yesterday a sell-off was extended below the four-month trend-line. Bearish action was stopped by the Oct 2 low at 1,106. Our expectations are turning further to the downside. Market participants are ready to price in the upcoming US payrolls data on Friday, and positive outcome may send the yellow metal as low as 1,100 and even below this psychological mark. The long term support for gold is July low at 1,070.Daily chart
Gold outlook in the one-hour chart remains strongly bearish at the moment. The metal may slow down the pace of decline on Thursday, while bulls are looking for returning the price back to 1,120. Still, the 200-hour SMA at 1,146 is going to continue putting extra downward pressure on the metal in the foreseeable future.
Hourly chart
Market participants take more bullish positions
Meantime, OANDA's long traders are gaining even higher market share every single day, while the total number of their open positions rose from 70.8% to 73.5% in 24 hours through Thursday morning. On top of that, 77% of SAXO Bank clients preserve their positive stance with respect to gold, which translates into 18% growth of long positions since Tuesday.