- More than 70% of SWFX traders continue to hold long positions
- Advantage of bulls is signaling that the metal is too overbought and losses can materialize soon
- Aggregate daily technical indicators are backing the bears and are pointing downwards
- Economic events to watch in the next 24 hours: Spanish GDP (Q3); Euro zone M3 Money Supply (Oct); German Gfk Consumer Confidence (Dec); BOE Financial Stability Report; Japanese CPI (Oct) and Unemployment Rate (Oct)
Gold languished near its lowest level in nearly six years on Thursday, as the US Dollar traded at multi-month highs, while US fundamentals reinforced market expectations of an interest rate hike next month. Orders for long-lasting manufactured goods rose in October following two months of weakness, while a key category that tracks business investment plans surged by the most in three months. Orders for durable goods soared 3% last month, according to the Commerce Department, driven by an increase in demand for commercial aircraft. A key category that serves as a proxy for business investment spending climbed 1.3% in October, registering the best result since July.
New Zealand's merchandise trade shortfall widened slightly last month from a year earlier, as a precipitous decline in value of overseas shipments of milk powder affected exports. The country logged a NZ$3.24 billion deficit for the 12 months to October. The decline was led by a 29% decline in the value of milk powder exports as prices fell. Measured on a monthly basis, the trade gap narrowed from a revised NZ$1.14 billion in September to NZ$963 million, Statistics New Zealand reported. Exports dropped 4.5% year-on-year to NZ$3.83 billion in October, driven by a 29% plunge in milk powder. Dairy exports overall plummeted 18% last month compared with October a year earlier. China outperformed Australia and became New Zealand's top annual export destination in October. Goods exports to China increased 9.2% to $678 million in October from the year earlier month, taking annual exports to the country to $8.41 billion. At the same time, exports to Australia plunged 8% to $754 million in the month, for an annual total of $8.36 billion.
US orders for long-lasting manufactured goods rose in October following two months of weakness, while a key category that tracks business investment plans surged the most in three months. Orders for durable goods soared 3% last month, according to the Commerce Department, driven by an increase in demand for commercial aircraft. A key category that serves as a proxy for business investment spending climbed 1.3% in October, the best result since July, suggesting that the worst of the drag from a strong Greenback and deep spending cuts by energy firms was over. At the same time, the number of Americans applying for jobless benefits declined more than expected last week, indicating that labour market conditions continued to tighten. Initial claims for state unemployment benefits declined 12,000 to a seasonally adjusted 260,000 for the week ended November 21, the Labor Department said.
Upcoming fundamentals: Japan's inflation to remain negative in October
While there are no fundamentals expected from the United States on Thursday due to the Thanksgiving holiday, the focus will be shifted to other countries. Today is an important day in terms of Japanese statistics as inflation and labour market data is due at 23:30 GMT. Both Tokyo and national core CPIs are projected at -0.1% in October, meaning continuous deflation threats will not disappear in the nearest future. At the same time, annualized household spending in Japan is estimated to be unchanged in October after a -0.4% drop in September. Unemployment rate is set to remain flat at 3.4% in October.
Gold is stuck between July low and weekly PP
More or less optimistic US statistics used to have a "reminder" effect for investors who switched back to Fed policy expectations. However, Wednesday's move downwards was again limited by July low at 1,070. The bullion is has been pressured by this important support for the second consecutive week. It makes us assume that the bears need more pronounced impetus to send the price towards fresh lows below 1,064 (Nov 18 low). Thursday and Friday are US data-free days, meaning volatility is highly likely to remain restrained.Daily chart
Gold surprisingly continued to develop between two boundaries of the triangle pattern, even though the range between them narrowed to just $10. As a continuation pattern, we expect an eventual bearish break-out and a confirmation of the 1,068-70 mark. This event may happen very soon, but before that a short term revival in the direction of 1,076-78 (200-hour SMA) is possible.
Hourly chart
SWFX bulls secure at least 70% of the market
The yellow metal is also overbought in both OANDA and SAXO Bank markets. The former's clients are holding 76.07% of bullish open trades, while SAXO Bank traders are long in 71.93% of all cases. Bears may benefit from this distribution and will try to enter the market with fresh short positions.