- Share of long open trades remains upbeat at 59%
- Key resistance area created by 55/20-day SMAs at 1,116-18
- Movements likely to remain muted before Fed meeting
- Economic events to watch in the next 24 hours: French CPI (Aug); German ZEW Economic Sentiment (Sep); Euro zone Trade Balance (Jul), Employment Change (Q2) and ZEW Economic Sentiment (Sep); US Retail Sales (Aug), Empire State Manufacturing Index (Sep) and Industrial Production (Aug), UK CPI and PPI (Aug)
Gold remained under selling pressure on Tuesday, as a crucial FOMC meeting is looming. Nevertheless, expectations that the US central bank will raise rates this week have eased recently due to concerns over slowdown in China and volatility in financial markets. Even if the Fed refrains from hiking rates as soon as this Thursday, the cards for a rate increase in subsequent FOMC meeting are still on the table, meaning the precious metal is unlikely to receive any substantial boost in the months ahead.
Meanwhile, in Switzerland, deflationary pressures remained an acute threat in August, as the gauge of producer and import prices in the reported month declined at the fastest pace in more than six decades, while retail sales figure also posted a negative growth. According to the FSO, the PPI measure dropped 0.7% in August, missing the estimate of a 0.4% decline and following a 0.3% decrease in the preceding month. On an annual basis, the gauge plunged 6.8%, following a 6.4% slump in July. That was the biggest drop since April 1950, when the measure declined 7.1%. Moreover, the Swiss PPI has been falling steadily since October 2013. Amongst the product categories, which showed the biggest contraction in prices, were chemicals, medicaments and petroleum.
Upcoming fundamentals: Last retail sales and manufacturing data before Fed meets Thursday
US retail sales statistics for August will be announced at 12:30 GMT today, while industrial production numbers are due at 13:15 GMT. The former are estimated to add 0.3% and 0.2% on headline and core basis, respectively. In the meantime, analysts forecast the manufacturing output to decrease by 0.1% in August, following a 0.6% rise in July. Apart from that, the average Bloomberg expectation assumes the British consumer price index will fall to zero in August, after the indicator surprisingly remained at 0.1% a month before.
Gold is undecided as Fed meeting approaches
Gold fluctuated within the mean range of the several preceding days on Monday as it picked up to reach the weekly pivot point at 1,110. Despite all, movements are broadly quiet in terms of daily percentage changes and we see the similar situation to be in place until the Federal Reserve meeting on Sep 17. With only important fundamentals being able to provide the yellow metal with any substantial momentum, it is likely that resistance and support zones at 1,116/21 and 1,098/91, respectively, will limit movements for some period of time.Daily chart
In the one-hour chart, the precious metal continues to hover below the upper trend-line of the bearish pattern. The closest support to meet is the major psychological level of 1,100, which has already been touched on Friday.
Hourly chart
SWFX sentiment holds at 59%
In the meantime, OANDA share of bulls advanced further to 64.34% of all positions, while SAXO Bank traders are keeping 67% of long open trades, no change since Monday morning.