- SWFX traders remain committed to long positions and keep their share above 70%
- US employment data on Wed/Fri can raise the risk-seeking sentiment
- Daily technical indicators foresee a new round of losses for gold
- Economic events to watch in the next 24 hours: Spanish, Italian, French, German, Swiss, Euro zone, UK, Canadian and US Final Manufacturing PMI (Nov); German Unemployment Change and Unemployment Rate (Nov); Italian GDP (Q3) and Unemployment Rate (Oct); Euro zone Unemployment Rate (Oct); US ISM Manufacturing PMI (Nov), Construction Spending (Oct) and Total Vehicle Sales (Nov); FOMC Members Evans and Brainard Speak; Swiss Retail Sales (Nov), GDP (Q3) and Employment Level (Q3); UK Bank Stress Test Results and BOE Financial Stability Report; BOE Governor Carney Speaks; Australian GDP (Q3)
Gold is rising by around 1% on Tuesday as the US Dollar dropped from multi-month highs. Bullion's gains over the last two days have helped the precious metal to rebound from $1,052.46, the lowest level since February 2010 reached last week. Investors are keeping an eye on Friday's US payrolls data for further clues about the strength of the US economy. In addition to that, the ECB meeting will be closely watched for any impact on the currency markets. Assets in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained at their lowest since September 2008.
Canada's current account deficit shrank in the third quarter to the smallest level this year amid an increase in merchandise exports. The current account gap narrowed to C$16.21 billion in the third quarter from C$16.57 billion in the three months through June, sharply revised from an initially reported C$17.40 billion. Canada's trade are benefiting from a weaker currency that has supported the nation's exporters. The Canadian Dollar has lost 13% so far this year, making it one of the worst performers among major currencies. Canada's exports rose by C$4.7 billion and imports increased by C$3.4 billion. The biggest export gains were in consumer goods and autos categories. Meanwhile, lower exports of energy products offset some of the gains. Improving exports are key for the Canadian economy after the Bank of Canada said that recovering exports will drive the economic recovery in the second half of the year.
As widely expected, the Reserve Bank of Australia kept the official cash rate on hold at a historic minimum of 2% for the seventh consecutive month. Yet, the central bank left the door open for a further cut in 2016 to provide support to demand in case the necessity arises. The RBA said that the nation's economy continued to expand moderately in the face of a large decrease in capital spending in the mining sector. Even though GDP growth remained below longer-term averages for some time, business surveys indicated a gradual improvement in conditions in non-mining sector over the past year. This was coupled by stronger growth in employment and a steady jobless rate. Inflation is predicted to be consistent with the target over the next one to two years, according to the RBA. Thus, in such circumstances, the central bank saw the need for the monetary policy to remain accommodative, as low interest rates are acting to support borrowing and spending.
Upcoming fundamentals: Another busy day of Super Week
There any plenty of fundamental drivers for both commodity and FX markets on Tuesday, the second working day of a very important week for investors. Even though the most crucial events will take place during the week's second part, we have got a lot of statistics to watch today as well. The Bank of England is releasing the results of stress tests for seven biggest banks and building societies. They will include expectations for new capital requirements, while the BOE Governor Mark Carney will speak later in the day during his press-conference on the matter. Alongside, British manufacturing activity has probably decreased in November to 53.7 points, after the PMI index showed a surprisingly high number of 55.5 points in the preceding month. In the Asia-Pacific region, Australian GDP will be released by 0:30 GMT on Wednesday and analysts project an economic expansion of 0.7% in the third quarter, following an increase of 0.2% in April-June period.
Gold attempts to retake July low at 1,070
Disappointing statistics on Chicago PMI and US pending home sales dragged American equity markets lower on Monday, which consequently supported the safe-haven commodity. Gold was pushed above the weekly pivot point at 1,063 yesterday, and today's rally is already being extended above July low of 1,070. Closure above the latter will change our expectations back from negative to neutral. Extra gains can be prolonged up to 20-day SMA/monthly PP at 1,084/86. However, the long term estimate keeps bearish bias, as we are approaching the critical Fed meeting on Dec 16.Daily chart
The bullion has not only recovered all damages that have occurred on Friday of the previous week, but it is also trying to breach the 200-hour SMA at the moment. We are skeptical that gold is strong enough to close above this resistance. Failure to consolidate above 1,072 is going to support bears in the medium term and will confirm temporality of the current rebound.
Hourly chart
SWFX bulls secure more than 70% of the market
In addition to that, the yellow metal keeps the "overbought" status in both OANDA and SAXO Bank markets. The former's clients are holding 70.86% of bullish open trades, while SAXO Bank traders are gold-long in 64.85% (-3%) of all cases.