- Share of long trades fell from 72% to 59%
- Main resistance is located around 1,105
- Key demand can be found at 1,071
- Economic events to watch in the next 24 hours: Spanish Unemployment Change (Jul), US Factory Orders (Jun), UK Construction PMI (Jul), New Zealand Employment Change/Unemployment Rate (Q2)
Gold continued to decline for a third session in four on Tuesday amid anticipation that the Fed is on track to lift its benchmark interest rates later this year. Even though US fundamentals on Monday showed the world's largest economy may have lost some steam in the past two months, economists believe the Fed was still set to raise rates this year. Yet, the initial hike could be later than September. The pace of growth in the nation's manufacturing sector weakened in July. The ISM's barometer of the US factory activity dropped to 52.7, down from 53.5 a month earlier. At the same time a closely watched core PCE inflation remained steady in June, while consumer spending and incomes suggest robust, albeit moderate economic growth. Gold lost nearly 7% in July, its sharpest monthly decline in two years, as the looming rate hike supported the US Dollar and prompted investors to reduce their exposure to bullion.
Meanwhile, Australia's retail sales data exceeded expectations in June with the biggest increase in four months, while household spending for the second quarter likely boosted economic growth. Sales at Australian retailers surged a seasonally adjusted 0.7% on month in June, and 0.8% in volume terms, the Australian Bureau of Statistics reported. The June's indicator came in better than the revised 0.4% growth in May and economists' expectations for a 0.5% rise.
Upcoming fundamentals: NZ jobless rate to pick up, employment growth to remain subdued
Last month, the Reserve Bank of New Zealand cut interest rates in order to combat discouraging economic data. However, for now this move is unlikely to be mirrored in the labour market statistics today, which is due at 22:45 GMT. Unemployment rate has probably risen to 5.9% in the second quarter, while employment level is expected to increase by just 0.5% in the three months through June 30.
XAU/USD closes at lowest level since 2010
Even though gold still seems to be locked in the vicinity of 1,100 by showing no abrupt movements, yesterday it succeeded in pushing the daily candle to a new five-year low closing price of 1,084. Nonetheless, the most important target is placed at 1,071, where the Jul 20 low remains untouched. Bearish risks increase, as daily technical indicators are now giving signals to sell gold. Therefore, the mid-term outlook is pessimistic, as long as the yellow metal is trading at any levels below the long-term downtrend around 1,105.Daily chart
In the one-hour chart the bullion's horizontal development still seems to be more obvious. However, the future scenario is biased in favour of bears, as they may receive some extra momentum from the 200-hour SMA at 1,092 and local highs just above the 1,100 mark.
Hourly chart
SWFX bullish share drops below 60%
In the meantime, OANDA share of bulls rallied from 62% to 67.25% of all current positions, while SAXO Bank traders are also firmly optimistic towards gold at the moment, as there are 70% of bullish trades opened by Tuesday morning.