- Percentage of long positions changes within a margin of error (down from 63% to 62% on a daily basis)
- US retail sales to be the last crucial data release before the Fed meeting
- Technical indicators see no change in gold's value on Friday, but expect losses next week
- Economic events to watch in the next 24 hours: German CPI and Wholesale Price Index (Nov); French Current Account (Oct); Italian Industrial Output (Oct); ECB Targeted LTRO; US Retail Sales (Nov), PPI (Nov), Business Inventories (Oct) and Reuters/Michigan Consumer Sentiment Index (Nov); UK Construction Output (Oct) and Consumer Inflation Expectations; MPC Member Weale Speaks
The Bank of England kept interest rates at record lows, pointing to lower oil prices and weak wage growth, which is likely to keep a lid on inflation for some time to come. The nine-member Monetary Policy Committee voted eight to one to leave the main interest rate at 0.5%, where it has been since 2009. Policy makers voted unanimously to maintain the size of the BoE's bond portfolio at 375 billion pounds. For the majority officials, the outlook for growth and inflation in Britain does not yet justify a hike in the BoE's benchmark rate. Consumer inflation dropped 0.1% on the year in October and the gauge is expected to stay below the central bank's target of 2% throughout 2016. Investors expect the BoE to raise interest rates late next year or early 2017. Meanwhile, a separate report showed the UK's trade deficit widened sharply in October as imports rose. In the three months to October, the total trade shortfall increased to £8.4bn. More broadly, the import of goods jumped from £2.3bn to £35.4bnon month in October. At the same time, exports of goods decreased by £700m to £23.5bn, with many firms blaming a strong Sterling for a loss of competitive advantage.
New Zealand consumer confidence dropped in December as confidence over future conditions waned. The ANZ-Roy Morgan consumer confidence index declined 4 points from a six-month high to 118.7 in the run-up to Christmas, with a reading above 100 thresholds shows optimists outnumber pessimists. The one-year ahead outlook for the New Zealand economy plummeted 9 points in December to 6, while confidence in current conditions remained relatively flat, sliding less than one point to 122.1. Expectations for consumer price inflation over the next two years declined to 3.1% from 4.1% in the previous survey. The Reserve Bank of New Zealand is closely watching inflation expectations to assess how they affect wage and price behaviour. Inflation in New Zealand climbed 0.4% in the third quarter, considerably below the central bank's 1%-3% target range. Separately, New Zealand's manufacturing sector continued to expand at a solid clip in November. The Business NZ-BNZ performance of manufacturing index climbed from a revised 53.2 in October to 54.7 last month, where a reading above 50 signals an expansion in activity.
Upcoming fundamentals: US retail sales to be the last data before Fed
Retail sales are the type of statistics, which is closely watched by the Federal Reserve, along with other fundamentals including inflation, labour market and durable goods orders. Especially high attention will paid to the numbers today, because this data release on retail trade for November is the last influential report before the Fed meeting next Wednesday. Sales are estimated to grow by 0.2% month-on-month on a headline basis, while jumping by 0.3% on a core basis, which does not include car sales. Meantime, analysts also forecast a positive outcome for the producer price index, which has probably been flat in November and followed a 0.4% slump in October.
Gold in wait-and-see mode as US data is looming
Gold prices tanked below the weekly pivot point on Thursday, even though long traders used an attempt to hold the bullion above this technical level earlier in the morning. While yesterday the July low was not tested well enough, we see it happening Friday morning. US retail sales will be the last important piece of data before the Fed meeting next week, and optimistic numbers should reinforce the market view about rising interest rates. In this situation, gold should feel some uplifted bearish pressure in the next 24 hours, with a possibility to prolong a sell-off down to the weekly S1 at 1,058.Daily chart
A symmetrical triangle formed by gold in the one-hour chart is being confirmed to the south in the morning on December 11. Consolidation under the 1,069 mark, which is also underpinned by both the pattern's lower edge and 200-hour SMA, will imply additional losses for the precious metal. For the moment we are keeping a neutral stance, as the market is waiting for US data this afternoon.
Hourly chart
Percentage of bullish positions sees little change from Thursday
Along with the SWFX market, traders' preferences are more or less the same in both OANDA and SAXO Bank markets. OANDA's bullish clients are accounting for 71.17% from all their traders, while SAXO Bank participants are gold-long in 73% of all transactions.