- Bullish market share is reduced to 56%, down from 57% on Monday
- Movements likely to remain subdued on Tuesday amid lack of fundamentals
- Five out of eight daily technical indicators are signalling to sell the precious metal
- Economic events to watch in the next 24 hours: French and Italian Industrial Output (Sep); US Import and Export Prices (Oct), Wholesale Inventories (Sep); ECOFIN Meetings; FOMC Member Evans Speaks; RBNZ Financial Stability Report; RBNZ Governor Wheeler Speaks; Australian Westpac Consumer Confidence (Nov)
Even though Australia's business confidence faded in October amid financial market volatility and concerns over emerging markets, business conditions remained strong with sales, profits and employment all in green territory. According to National Australia Bank's survey of around 400 firms, the index of business conditions was unchanged at 9, whereas the business confidence gauge declined form 5 in September to 2 last month. A reading above zero indicates improvement in conditions, while a reading below zero shows deterioration. NAB's report showed the outperformance of sectors most exposed to a weaker Australian Dollar and all-time low interest rates. The survey sub-index of sales edged up to a historically high +15, while profitability measure lost a point to +8. Additionally, the sub-index of employment held at +3, the highest since 2011. The outlook for non-mining business investment remained upbeat with the corresponding measure falling by a point to +6 and above its long-term average.
Japan's current account remained in surplus in September for a 15th straight month as low oil prices and a weak Japanese Yen boosted income from overseas. Japan logged a 1.5 trillion yen excess in the broadest measure of trade, compared with economists' expectations for a 2.15 trillion yen surplus. Low energy import bill and the weaker Yen combined with influx of tourists from overseas improves Japan's trade picture. The strength in the current account shows that firms are continuing to accumulate wealth, which could be used for more investment and wage increases to help the world's third biggest economy that has struggled to gain steam.
China's inflation eased more than expected in October, while producer prices extended their decline to the 44th consecutive month, pointing to persistent deflationary pressure in the world's second biggest economy. China's consumer-price index climbed 1.3% in October from a year earlier, slower than the 1.6% year-on-year rise in September and compared with the 1.4% gain expected by economists. At the same time the producer price index dropped 5.9% in the reported month from a year earlier. Lower price pressure gives the People Bank of China leeway to continue easing its monetary policy, which has so far failed to underpin a pickup in growth despite six interest rate cuts and other measures to spur lending and borrowing. More stimulus is required to ensure the Chinese government growth target of no less than 6.5% in the next five years, to help the economy focus on a consumption-led growth model.
Upcoming fundamentals: US inventories to register zero increase in September
US wholesale inventories are due at 15:00 GMT on Tuesday, while analysts project them to show no growth in September after a 0.1% rise in the preceding month. The lower reading is considered to be a positive signal for investors, because declining inventories mean business spending is likely to pick up in the future. Meanwhile, the Reserve Bank of New Zealand will publish the Financial Stability Report in the evening today. The report provides insight into forecasts of inflation, economic growth and other important indicators that may influence key interest rates in the future. New Zealand's central bank experienced intense pressure to ease monetary policy further on the back of low inflation and sluggish economic expansion.
Gold rose for first time in nine days
Gold spent the first trading session of this week by attempting to revive after Friday's slide to 1,090. However, price gains were extremely limited due to pressure created by Dollar bulls. On Tuesday we expect changes to remain largely muted amid quiet fundamental data calendar. In the medium term the bearish pressure is highly likely to resume, especially as we are going to approach the Fed's December meeting. Bears are targeting the Jul low at 1,070 and monthly S2 at 1,059 afterwards. For the bearish outlook to be eroded, bulls should push the price back above the 1,105 mark.Daily chart
In case horizontal trading prevails on Tuesday, we may suggest that a new round of a sell-off will begin by the end of Tuesday around 1,092. Extra negative impetus should come from the downward-sloping 200-hour SMA at 1,121. A decline may continue until the 1,075 level, where XAU/USD will meet the bearish pattern's lower edge. For that to happen, however, markets must have some heavy fundamental background.
Hourly chart
Share of SWFX bulls cools down to 56%
Meantime, OANDA's long traders are holding their portion of open positions firmly above the 74% mark for the moment, being that yesterday it fell from 74.9% to 74.3%. Additionally, more than 70% of SAXO Bank clients preserve their positive stance with respect to gold.