- Portion of SWFX bulls is little changed at 72% (71% yesterday)
- Bulls are pushing gold prices higher as analysts see Fed December rate hike already priced into markets
- Aggregate daily technical indicators expect gold to continue going down
- Economic events to watch in the next 24 hours: German PPI (Oct); ECB President Draghi Speaks; Bundesbank President Weidmann Speaks; Euro zone Consumer Confidence (Nov); FOMC Member Dudley Speaks; UK Public Sector Net Borrowing (Oct); Canadian Retail Sales (Sep) and CPI (Oct)
Even though gold recovered some of the losses on Friday, the precious metal was set to end the trading week near the lowest level in more than five years as bullion struggled versus a stronger Dollar ahead of much anticipated US rate hike next month. The number of initial jobless claims in the US continued to hover near the lowest level in four decades last week as the labour market improves to reach full employment. Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 271,000 for the week ended November 14, giving the Fed confidence the US economy is ready for the first rate hike in almost a decade as soon as next month.
British retail sales declined below forecasts in October following a strong performance in the preceding month, the Office for National Statistics reported. This was mainly driven by a sharp fall in clothing and food store sales, which dropped 1.8% and 1.3%, respectively. UK retail sales volumes fell 0.6% month-on-month in October after an increase of 1.7% in September. The figure came against analysts' forecasts of a 0.5% drop on month. Excluding auto fuel, retail sales declined 0.9% from September's growth of 1.5%, thus, being also beyond the projected 0.6% decrease. Measured on an annual basis, retail sales revealed disappointing results as well. Growth in retail sales including auto fuel dropped 3.8% in October from 6.2% in the previous month. Economists expected sales to expand by 4.5%. Excluding auto fuel, retail sales gained 3% compared with September's rise of 5.7%. Analysts' projected a 3.9% increase.
The value of Canadian wholesale trade unexpectedly declined in September, weighed by a decrease in motor vehicle and parts sales for the third consecutive month, according to Statistics Canada. Wholesale trade dropped 0.1% to C$55.2 billion, against economists' expectations for a 0.3% gain, while the volume of sales declined by 0.4%. August's figures were revised to show no change after an initially reported fall of 0.1%. Lower sales were registered in three of the major sectors, which make up 45% of wholesale trade. The motor vehicle and parts category was the major factor behind the decline, falling 3.0%. Excluding autos, overall sales rose 0.5%. Economists have been predicting a strong economic recovery in the second half of the year, after Canada's GDP shrank during the first five months of 2015. In October, the Bank of Canada maintained its interest rate at 0.5%, citing persistent slack in the economy. It also raised third quarter growth outlook from 1.5% to 2.5%, while the tone of the statement remained cautious. Economists project the third quarter expansion will stay on track for 2.5% growth, but warn that the economy could end the quarter on a much softer note. The latest Canadian GDP figure for August revealed a 0.1% growth.
Upcoming fundamentals: UK government borrowing to plummet in October
Total net borrowing of the British government is estimated to fall down to just 5.5 billion pounds in October of this year, compared to 7.1 billion pounds a year earlier. In September 2015 the country borrowed 8.6 billion pounds. In spite of that, even more important fundamentals will be released in Canada today, including inflation and retail sales data. Projections among economists are different for two indicators, being that consumer prices have probably rebounded in October and retail sales' growth slowed down or even decreased on a core basis in September of this year. British data is up first at 9:30 GMT, while Canadian numbers will be out at 13:30 GMT.
Gold wants to retake 1,084
Gold surged the most since Oct 14 on Thursday, by jumping from July low at 1,070 towards the weekly pivot point at 1,084. Today we may observe a consolidation above the latter mark. Closure above 1,090 will mean that the bullion managed to fully erase this week's losses. Short term rally is possible as traders see the Fed's December rate hike looming, but the pace of tightening will be slow. Gains should be contained by the 1,100 mark, where the monthly S1 is placed at the moment. However, next week's development may provide gold with another downward momentum.Daily chart
One more bearish channel has been shaping in the one-hour chart. Channel's boundaries were adjusted to show a more negative slope. Now the spot is located at the upper boundary near 1,085. A return below 200-hour SMA (1,082) should happen quickly, in order to avoid the possibility of another rally. Otherwise, we will expect gold to commence an upward breakout from the channel.
Hourly chart
SWFX bullish share stays firmly above 70%
A huge advantage of long traders is also true for the OANDA market at the moment as bullish share spiked even further to 76.1% by November 20. Additionally, almost 77% of SAXO Bank clients preserve their positive stance with respect to gold, up eight percentage points on a daily basis.