- Bullish traders are currently building up their presence
- Outlook will remain negative as long as resistance at 1,100 is intact
- We can expect a small rebound in the region of 1,070/60
- Average forecast for the end of October is 1,144
- Upcoming events: US CB Consumer Confidence, Flash Services PMI, Richmond Manufacturing Index
© Bloomberg
Gold remained stuck near its weakest level in more than five years on Tuesday amid growing expectations of a US interest rate increase in the coming months. The Fed starts a two-day meeting later in the day where central bankers are likely to point that a rate hike later in the year is certain as the US economy gains traction.
Meanwhile, a further decline in Chinese stocks following their deepest slump since 2007 on Monday barely affected trading in gold, which is typically considered as a safe-haven asset.
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US consumer sentiment to deteriorate
Even though we have a couple releases that may influence the price of the precious metal today, the most important is considered to be CB Consumer Confidence. According to the consensus forecast, the sentiment of consumers is likely to decline this month compared to the previous reading.
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XAU/USD hesitates to leave 1,100
The bears are not as active as expected, but the outlook will remain negative as long as resistance at 1,100 is intact. We still expect the technical indicators to turn out correct by gold gaining strong downward momentum and head towards the 2010 low at 1,045. Below this support is the 2008 high at 1,032. An alternative course of events is a breach of 1,100 and a subsequent rally back to the 2014 low, where bulls may start taking profits and thus renew a sell-off.Daily chart
© Dukascopy Bank SA
The outlook is confirmed to be bearish in a lower time-frame as well, but it appears that we can expect a small rebound in the region of 1,070/60, where the exchange rate should make a contact with the falling support line.
Hourly chart
© Dukascopy Bank SA
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Traders prefer to be long gold
In the meantime, the long/short ratio at OANDA and SAXO Bank is either without changes or showed a slight decline. At the moment 65% of traders at OANDA are long the gold, while at SAXO Bank percentage of bulls is closer to the SWFX data, at the yesterday's level of 70%.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast for the end of October is 1,144
According to the average forecast, the price of gold is expected to rise up to to 1,144 during the next three months. As for the distribution of forecasts above and below the spot price, at the moment 59% of forecasts are bullish. Most of the forecasts fell into two price ranges: 1,150-1,100 and 1,100-1,050. Both intervals collected 15% of the votes. © Dukascopy Bank SA