- Share of long trades decreased from 55% to 54%
- Bulls to target 1,156 (100-day SMA) after crossing 2014 low
- Bearish interim goals are Aug 26/27 lows at 1,117
- Economic events to watch in the next 24 hours: German Retail Sales (Jul); Italian Retail Sales (Jun) and CPI (Aug); Euro zone CPI (Aug), US Chicago PMI (Aug); Swiss KOF Leading Indicator (Aug); Chinese NBS Manufacturing PMI (Aug), Non-Manufacturing PMI (Aug), Caixin Chinese Services and Manufacturing PMI (Aug); RBA Interest Rate Decision
Bullion struggled to recover from last week's losses on Monday even as the US Dollar weakened, due to growing possibility that the Fed is on course to hike interest rates this year despite recent market turbulence. Nevertheless, the precious metal remains on track to end August higher after hitting a seven-week high during the month as concerns over a slowdown in the Chinese economy triggered safe-haven bids. US central bank policy makers meet on September 16-17 and are expected to raise rates despite the recent plunge in global equities and deepening worries over China, the world's second biggest economy.
Meanwhile, US consumer spending rose a bit in July as households purchased more automobiles, adding to further evidence of strength in the economy that could keep the door open to a Fed interest rate hike this year. The Commerce Department reported consumer spending—the lifeblood of the US economy, which accounts for more than two-thirds of US economic activity, climbed 0.3% following an upwardly revised 0.3% increase in June. Meanwhile, personal income, reflecting Americans' pre-tax earnings from salaries and investments, rose 0.4%, replicating the gains of the previous three months. The price index for personal consumption expenditures, the central bank's preferred inflation gauge, inched up 0.1% from June and 0.3% from a year earlier.
Upcoming fundamentals: RBA rate decision expected, Chinese PMI to stay well below 50
After holding the key interest rate unchanged at 2% last time, the Reserve Bank of Australia is forecasted to make the same decision tomorrow. On the optimistic side, recent data on retail sales and consumer spending has been positive; however, instability in China may force the RBA to weaken monetary policy further. Meanwhile, both NBS and Caixin Chinese PMI statistics for manufacturing and services sectors is due tomorrow morning. At the moment average economists' expectations assume that the indicators will see no rebound for the time being.
XAU/USD closes above 2014 low again
After spending one full trading day (Thursday) below the 2014 low, the bullion gained enough momentum in order to be pushed back above this crucial technical level. Moreover, on Friday gold managed to close above the 1,131 mark, meaning that there is a chance of a continuous recovery. Supported by short term technical studies, bulls are expected to prolong a recovery up to the 100-day SMA/monthly R1 at 1,156 soon, while the next resistance seems to be placed at 1,170 (recent lows). On the other hand, bears are likely to benefit from the long term negative outlook for gold.Daily chart
XAU/USD is slowly eroding our negative projections by trading above the 2014 low at the moment. However, the price is still located below 200-hour SMA (1,139). Thus, while it is hovering between 1,131 and 1,139, our outlook is likely to be neutral as market is waiting for additional impetus from either bullish or bearish side.
Hourly chart
SWFX sentiment remains marginally bullish
In the meantime, OANDA share of bulls is staying at 65.74% of all current positions at the moment, while SAXO Bank traders are keeping as many as 64% of long open trades.