Gold settles below 1,100 on uplifted Greenback

Note: This section contains information in English only.
Source: Dukascopy Bank SA
  • Bullish market share is flat at 55% for a third working day in a row
  • Prices are set for a drop in the direction of support at 1,084; momentum to be provided by 100-day SMA
  • Daily studies are neutral, as RSI indicator assume the precious metal is not overvalued anymore
  • Economic events to watch in the next 24 hours: FOMC Members Fischer and Lacker Speak; US JOLTS Job Openings (Nov); UK Manufacturing/Industrial Production (Nov) and NIESR GDP Estimate (3M-Dec); BOE Governor Carney Speaks; Chinese Trade Balance (Dec); Canadian Manufacturing Sales (Nov); BOJ Governor Kuroda Speaks

© Dukascopy Bank SA
Precious metals' prices bounced back on Monday, following gains which had been posted earlier at the end of last week. However, silver and gold lost only 0.5% and 0.9%, accordingly. Hence, they used to be the best daily performers and were followed by other commodities with much sharper losses. Separately, oil prices slumped by 5-6% during the session, while approaching a vital mark of $30 per barrel for both Brent and Crude. The two types of oil have seen narrowing spreads during the past several weeks and now the difference is minimal. Even though Chinese authorities are attempting to battle weakness in the economy and offered fresh stimulus along with Yuan depreciation, these facts seem to have little impact on commodities. Economists predict further falls for oil below the 2004 low in the run up to a new stockpiles report on Wednesday. Morgan Stanley and Goldman Sachs experts see prices around $20 per barrel in the medium-term, as they will be pressed down by higher US Dollar and worldwide oversupply.

At the same time, gold prices rose on Tuesday following a two-day decline, as concerns over economic health of China, the world's top consumer of gold at around 1,000 tonnes a year, and pressure on equity markets spurred investors' interest in safe-haven assets. Asian shares traded near four-year lows, while oil prices hovered near 12-year lows. Holdings of the world's biggest gold-backed exchange-traded fund, SPDR Gold Shares, increased 0.69% on Friday.

China's consumer inflation rose in December amid increasing food prices, while companies' factory-gate prices continued to decline, adding to fears about growing deflation risks in the world's second biggest economy. According to the National Bureau of Statistics, China's CPI climbed 1.6% last month from a year earlier, compared with November's print of 1.5%. Food prices increased 2.7% in December, while non-food items climbed 1.1%. For all 2015, inflation climbed 1.4%, the slowest annual gain since 2009 and well below the government's goal of keeping last year's inflation below 3%. In 2014, China's inflation rose 2.0%. At the same time, the producer price index remained unchanged at minus 5.9% in the reported month. It was the PPI's 46th monthly decline in a row as Chinese manufacturers continue to battle fierce price pressure and fight overcapacity. For all of 2015, the PPI fell 5.2% compared with a decrease of 1.9% in 2014. China's consumer price index is likely to rise 1.7% in 2016 from last year while its producer price index is predicted to fall 1.8% on an annual basis, according to the People's Bank of China estimates. Deflationary cycles encourage consumers to refrain from buying and businesses to hold off from investing indefinitely amid anticipation that prices will continue declining.


Hiring and investment intentions of Canadian companies declined to their lowest level since 2009, according to the Bank of Canada's survey. The central bank reported that the effects of low commodity prices spread across many sectors beyond resources. Companies paint a gloomy picture for this year, as low oil prices have posed significant challenges for many companies. Therefore, many companies cited a need to cut costs, which will lead to lower hiring intentions or even staff layoffs. The disappointing conclusions of the survey prompted bets that the Bank of Canada will cut its trend-setting interest rate at its next scheduled policy meeting January 20. However, some economists argue that it would be a premature decision, with the effects of the BoC's two rate cuts in 2015 still working their way through the system. BoC's Governor Stephen Poloz has said recently that there are both conventional and unconventional tools at the central bank's disposal to support the Canadian economy. Among them is the BoC's ability to lower the benchmark rate into negative territory, if necessary. At the moment, the majority of experts expect Poloz to refrain from moving the rate.

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Upcoming fundamentals: US to show a pick-op in hiring in November



An employment report released by the Bureau of Labour Statistics is estimated to register an increase in hiring in the US in November 2015. Although this indicator is published relatively late and follows all previous official publications from the Department of Labour, it can be considered as a reliable signal for future employment conditions in the world's most powerful economy. Annualized job openings are forecasted to grow to 5.41 million in November from 5.38 million in October. Among upcoming news from other regions, analysts are closely watching speeches from BOE and BOJ governors Mark Carney and Haruhiko Kuroda today. Both of them will participate in a panel discussion at the monetary policy and financial stability forum in Paris, France. They will be joined by the Fed Governor Stanley Fischer and IMF Chief Christine Lagarde. Meanwhile, US earnings season has neared the time to shine and boost activity in equity markets, which is often translated into extra volatility for commodity and FX markets as well.


Gold settles below 1,100 on uplifted Greenback

Bearish strength pushed the bullion substantially lower during the first trading session of this week. Recovering equity markets in Asia and risk-seeking sentiment resulted in XAU/USD's retreat below the psychological level of 1,100. Gold managed to limit the sell-off at the weekly pivot point at 1,092, the second support for it yesterday. Some buoyant action is possible in the next 24 hours, but the mid-term risks are still skewed to the downside. While aiming at the 1,084/81 support zone, the bears will be helped by the main resistance, namely 100-day SMA at 1,107.

Daily chart
© Dukascopy Bank SA

The yellow metal seems to be unable to preserve gains above the October 2015 high. Moreover, in the one-hour chart gold has just confirmed the bullish channel pattern. It proclaims that negative pressure remains in place and the bears are likely to attack the next demand in face of the previous month's high at 1,088.

Hourly chart
© Dukascopy Bank SA

A moderate advantage is preserved by SWFX bullish traders

Distribution between open positions in the SWFX market has been flat for a third consecutive day on Tuesday, as the bulls and bears are still holding 55% and 45% of them, respectively. In the meantime, OANDA and SAXO Bank markets' sentiment changed in different directions yesterday. The former's clients continued to liquidate their long trades to push their share down from 68.7% to 67.9% by Tuesday morning, while SAXO Bank market participants decided to buy more gold in the past 24 hours (65.8% today vs 62% yesterday).
















Spreads (avg,pip) / Trading volume / Volatility


Market participants foresee the price of gold at 1,075 by April-end

Traders who were asked regarding their longer-term views on gold between Dec 12 and Jan 12 expect, on average, to see the metal around 1,075 by the end of April. At the same time, 50% of participants believe the price will be generally below 1,100 in ninety days. Alongside, 34% (-1%) of those surveyed reckon the price will trade in the range between 1,100 and 1,250 throughout the next three months.

© Dukascopy Bank SA

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