- Bullish market share stabilised at 55% by Monday morning, no change from January 8
- 100-day SMA (1,108) to continue weighing on gold prices in the nearest future
- Daily studies are completely mixed at the moment, as RSI assumes the metal is too overvalued now
- Economic events to watch in the next 24 hours: Spanish Industrial Production (Nov); Euro zone Sentix Investor Confidence Index (Jan); US Labour Market Conditions Index (Dec); FOMC Members Lockhart and Kaplan Speak; Swiss Retail Sales (Dec); Canadian Housing Starts (Dec); Japanese Trade Balance (Nov) and Current Account (Nov)
Gold recovered on Monday, trading close to the highest level in nine weeks amid safe-haven bids for the precious metal. Bullion hit the highest level since November on Friday, gaining more than 4% to its value this year, as worries over China's economy and tumbling equity markets sparked investors' interest in the yellow metal. Holdings of the world's largest gold-backed exchange-traded fund SPDR Gold Shares, surged 4.2 tonnes on Thursday.
The US economy created 292,000 jobs in December, in line with analysts' expectations for solid and steady growth. The Labor Department revised the previous two months data, saying that the economy added a net 50,000 new jobs more than initially reported. November payrolls were up 252,000, while the October gain was 307,000. The unemployment rate stayed at 5% last month, while average hourly wages remained flat. The jobless rate, which has dropped since hitting the 10% mark in October 2009, is now hovering just above what economists deem full employment, the point where further declines could start to push up inflation. Meanwhile, average hourly earnings were virtually flat in December, which was disappointing. Economists hoped to see a 0.2% rise in paychecks. When compared to a year ago, wages climbed 2.5%, which matches October's print for a post-recession high. On the upside, the labour force participation rate ticked up a tenth of a percentage point to 62.6% as the labour force grew by 466,000 persons. In a sign of confidence in the economy, the Fed in December hiked borrowing costs that had helped stimulate the economy since the Great Recession. The Fed's 10-member voting committee said in meeting minutes that the labour market, though still shy of its full potential, showed "further improvement" and "confirmed that underutilization of labor resources had diminished appreciably since early this year."
The Canadian economy created 22,800 net jobs in December amid a big gain in part-time jobs, according to Statistics Canada. However, the number of positions in the category of full-time employment actually declined last month by 6,400. Canada's unemployment rate remained at 7.1%. The December increase followed a decline of 35,700 jobs in November. Economists had projected the economy to add 10,000 new positions on the reported month. In addition to that, the federal agency published its 2015 review of the labour market survey that showed Canada's employment climbed 0.9% over the course of the year as the labour force bulked up by 158,000 net jobs, the best result in three years. A separate report showed the value of Canada's building permits issued in November plummeted 19.6% amid massive declines in the energy-producing province of Alberta. The plunge was far greater than the 0.3% decline expected by economists and the biggest since the 26.7% dive seen in August 2014. The value of residential building permits dropped by 17.8% in November while non-residential permits nose-dived by 22.7%. High prices for single-family dwellings have contributed to a shift in demand for apartments. From January to November, 66.2% of new residential units approved were multi-family dwellings.
Upcoming fundamentals: All eyes on FOMC members' speeches on Monday
Today two non-voting members of the Federal Open Market Committee will speak in the afternoon. Atlanta Fed President Dennis Lockhart will talk about economic outlook in Atlanta at 17:40 GMT and will be followed by Dallas Fed President Robert Kaplan at 22:50 GMT. He will deliver remarks at the North Texas Economic Forum in Dallas. Kaplan is this year's alternate member of the FOMC, meaning he is allowed to vote on monetary policy decisions when the St. Louis Fed President is for any reason unable to attend an FOMC meeting. Meanwhile, the US labour market conditions index should be released at 15:00 GMT on Monday. This indicator has contracted substantially since March of the previous year, meaning labour conditions in the world's most powerful economy are worsening. Today it is estimated to cool down to zero points for December, down from 0.5 points in November and 4.0 points in February 2015.
Gold to be pressed down by 100-day SMA
Last Friday the precious metal formed a long lower shadow candlestick, meaning the bears failed to hold to daily gains. Initially they were managing to push prices down to 1,092 (Jan 7 open), but it eventually closed trading near Oct 2015 low at 1,104. We see 100-day SMA (1,108) as the main resistance for the bullion at the moment. Friday's inability to extend a rally after two consecutive days of growth is putting positive prospects at risk. The mid-term bearish target is 55-day SMA/monthly R1 at 1,084. The bulls, however, are hoping to overcome 100-day SMA and climb as high as the monthly R3 at 1,127.Daily chart
The one-hour chart assumes the yellow metal is unlikely to register any heavy losses in the nearest future. It should be supported by the last year's December high at 1,088 and 200-day SMA, which is rapidly going upwards near 1,079. Another contributor to price stability will be economic calendar, which awaits no major US fundamentals until the end of a new working week.
Hourly chart