- The bulls gained more ground (56% vs 54% yesterday) after a price drop on Wednesday
- November-December downtrend to be a key mid-term driver for gold
- Five out of eight daily technical indicators are neutral; weekly ones see gold lower during January 4-8 week
- Economic events to watch in the next 24 hours: US Unemployment Claims (Dec 25); ECB Monetary Policy Meeting Accounts
Contracts to buy previously owned homes in the US dropped in November for the third time in four months, suggesting growth in the housing market may be cooling. According to the National Association of Realtors, pending home sales index fell 0.9% to 106.9, compared with a 0.5% gain expected by economists. In October, pending home sales in climbed 0.4%, revised from a previously reported gain of 0.2%. In annual terms, pending home sales increased at an annual 5.1% rate in November, surpassing expectations for a 4.0% rise and following a gain of 2.3% in the preceding month. Pending home contracts become sales after a month or two, and the decreases in recent months could indicate slower growth in homebuying in 2016, when interest rates are predicted to climb. Mortgage rates have only inched higher since the Fed hiked the benchmark rate by a quarter point on December 16, but policy makers expect to continue raising rates next year. Furthermore, the NAR reported earlier this month that its more closely watched index, final sales of existing homes plunged 10.5% in November to an annual rate of 4.76 million, the lowest level in 19 months. The NAR pointed to delays triggered by new federal rules, coupled with a tight supply of for-sale homes, as the primary reasons.
US consumer confidence strengthened in December amid robust economic data and falling unemployment. According to the Conference Board, consumer confidence index rose to 96.5 in December, up from 96.5 in the preceding month. In September, the reading surged to the highest level since August 2007, when consumer confidence came in at 105.6. Steady growth of the world's number one economy, recent decline in the jobless rate and modest growth of retail sales influenced Americans view about the domestic economy, labour market and spending. GDP increased by an annualized 2.0% in the third quarter, beating the forecasts calling for a 1.9% clip, according to the Department of Commerce. In the previous three-month period, the economy had expanded by a much more robust 3.9%. A separate report showed the US goods trade shortfall shrank slightly in November, as both imports and exports declined, the Commerce Department said. The trade gap narrowed 1.3% in November to $60.5 billion from a revised $61.3 billion in October. Exports of goods decreased 2% to $121 billion in November, while imports declined 1.8% to $181.5 billion, with the drop concentrated in consumer goods.
Gold pierced through weekly S1 to park near 1,060
Gold traded downwards on Wednesday, as declining commodities across the board failed to keep the yellow metal any near the green territory. US Dollar rallied, while gold prices dipped down to the 1,060 mark. After it received some bearish support from the 20-day SMA, the metal decided to ignore the weekly S1 and went through this technical level with ease. Now the focus is shifting to the weekly S2, which is reinforced by the lower Bollinger band at 1,055/54. Here we can observe some buoyancy for gold, but the mid-term outlook still remains largely negative.Daily chart
The precious metal is required to close below the 200-hour SMA for a second consecutive day on Thursday, in order to affirm the bearish outlook and sentiment among traders. In such a case, the next focus will turn to the 2010 low at 1,044. Before that, gold will have to deal with the current December low at 1,047.70.
Hourly chart
Sentiment favours bullish traders before NY holidays
The same situation is true for both OANDA and SAXO Bank markets where the percentage of long trades soared by Thursday morning. At the moment three out of four OANDA clients are bullish on the precious metal, while SAXO Bank traders are positive in 72% (69% yesterday) of all cases.