- Portion of SWFX bulls is little changed at 72% (71% yesterday)
- Bears to target the 2010 low at 1,044 after confirming this year's (already) previous low at 1,070
- Aggregate daily technical indicators expect gold to continue going down
- Economic events to watch in the next 24 hours: US Housing Starts and Building Approvals (Oct), EIA Crude Oil Inventories (Nov 13); FOMC Meeting Minutes; Swiss ZEW Survey (Nov); Canadian Housing Starts (Oct); New Zealand PPI (Q3); Japanese Trade Balance (Oct); BOJ Interest Rate Decision and Monetary Policy Statement
Gold prices fell slightly on Wednesday, trading close to its six-year low, as investors are preparing for the first US interest rate hike in almost a decade next month, offsetting safe-haven bids. The US Dollar stabilized near its highest level in seven months versus a basket of currencies as the Euro dropped amid expectations the European Central Bank will have to ease monetary policy further next month, while US fundamentals supported the case for December rate hike. US consumer inflation rose in October after two consecutive months of declines as the cost of gasoline and a range of other goods increased. Signs of stabilization in prices following a recent downward spiral is likely to be welcomed by the Fed and give officials confidence that inflation will steadily move towards the central bank's 2.0% goal.
US consumer inflation rose in October after two consecutive months of declines as the cost of gasoline and a range of other goods increased. According to the Labor Department, US consumer price index climbed 0.2% last month, reversing September's 0.2% decline. Measured on an annual basis, costs of living in the US rose 0.2% after being unchanged in September. Signs of stabilization in prices following a recent downward spiral is likely to be encouraging news for the Fed and give officials confidence that inflation will steadily move towards the central bank's 2.0% goal. Economists predict the first signs of progress sometime in the next few months, as the precipitous decline in energy prices starts to peter out of the data. The so-called core CPI, which excludes food and energy costs, gained 0.2% after a similar gain in the prior month. In the 12 months through October, the core CPI increased 1.9% after rising by the same margin in September.
Upcoming fundamentals: BOJ rate decision to follow disappointing GDP data
The Bank of Japan will have to decide, whether to expand its quantitative easing programme from the current level of 80 trillion yen per year, after data showed the world's third-largest economy was pushed back into technical recession in July-September quarter of this year. Market participants, however, remain sceptical that the BOJ will move today. Just before the regulator's meeting, Japan's trade balance data will be published at 23:50 GMT. Economists foresee the volume of exports weakening by 2.1% in October, while imports might have dropped by as much as 8.6%.
Gold crashed to close below July low
Precious metal confirmed the lowest level since year 2010 at 1,070 which was reached back in July. US CPI data pushed odds for a Fed rate hike strongly to the upside and decreased demand for the safe-haven metal. In case it consolidates below the mentioned level today, we should expect losses to extend below 1,059 (monthly S2) in the nearest future. Penetration of the latter mark will reopen the 2010 low at 1,044 and subsequently the 2008 high at 1,031. Bearish expectations are also relevant for the medium term, at least until the Fed's mid-December meeting.Daily chart
Along with bearish confirmations from the daily chart, we observe a breach of the trend-line in the one-hour chart. It proclaims even more considerable slump for gold in the foreseeable future. Meantime, 200-hour SMA is placed at 1,087 and it continues to trend in the southern direction.
Hourly chart
SWFX bullish share consolidated firmly above 70%
A huge advantage of long traders is also undeniable in the OANDA market at the moment, even though their share fell in the past 24 hours, down from 78.3% to 73.9% by Wednesday morning. Additionally, more than 70% of SAXO Bank clients preserve their positive stance with respect to gold.