- 72% of open positions are set to buy
- Main resistance is located around 1,100
- Key demand can be found at 1,080
- Economic events to follow in the next 24 hours: French, German, Euro zone, UK and US Manufacturing PMI (Jul), US Personal Spending (Jun), RBA Interest Rate Decision, Australian Trade Balance and Retail Sales (Jun)
Gold declined on Monday, hovering around the lowest level in more than five years, as expectations of a looming interest rate hike in the US spurred selling even after the precious metal dropped the most since 2013 in July. The yellow metal lost almost 7% last month, the sharpest monthly decrease since June 2013. It fell for a sixth consecutive week last week, its longest such streak since 1999. The US rate increase could come as early as September, presenting more downside pressure on the non-interest yielding gold.
Meanwhile, the Canadian economy shocked markets, as the data showed a fifth negative GDP reading in a row. Statistics Canada reported that the economic output shrank 0.2% in May, after contracting 0.1% in the preceding month. Analysts, however, had expected a flat reading in the reported month. Measured on an annual basis, Canada's economy grew 0.5%, compared with the 1.2% recorded in April. The data increased chances that the economy slipped into recession in the first half of the year. The major drag came from Canada's manufacturing sector, which contracted 1.7%.
Upcoming fundamentals: RBA to keep rates unchanged, Australian trade deficit to widen in June
The Reserve Bank of Australia is estimated to maintain the Official Cash Rate unchanged for a fourth time tomorrow. Last time the RBA changed its stance in April of this year, when the benchmark was cut from 2.25% to 2%. In addition to that, Australian trade deficit is forecasted to widen down to A$3.06 in June, while retail sales have probably added 0.5% the same month.
XAU/USD flat around 1,095
Gold finished the second consecutive trading week without any noticeable price changes. The metal continues hovering just beneath the 1,100 round level, even though there is still room for further losses. The closest supply is currently represented by the long-term downtrend line, which coincides with the weekly R1 at 1,105 and is followed by a bunch of resistances around 1,113 (monthly PP, 20-day SMA, weekly R2). On the other hand, the only important support is the recent low at 1,080, which is going to be the main target for bears in the short-term.Daily chart
The situation is completely similar in the one-hour chart, where the horizontal development is more visible. It seems that the precious metal took a pause in order to decide its near term future. However, the scenario is biased in favour of bears, as they may receive some extra momentum from the 200-hour SMA at 1,093 and local highs just above the 1,100 mark.
Hourly chart
SWFX sentiment strongly bullish towards gold
In the meantime, OANDA's bulls are in the safe majority with 62% of all current positions, while SAXO Bank traders are also firmly optimistic towards gold at the moment, as there are 66% of bullish trades registered in the morning on August 3.