- Portion of SWFX bulls is little changed at 71% (72% yesterday)
- Bears are determined to retake July low (1,070), in case US CPI data brings positive surprise
- Aggregate daily technical indicators see the yellow metal strongly lower on Tuesday
- Economic events to watch in the next 24 hours: Italian Trade Balance (Sep); German and Euro zone ZEW Economic Sentiment (Nov); US CPI (Oct) and Industrial Production (Oct); UK CPI and PPI (Oct); New Zealand GDT Price Index; Australian Wage Price Index (Q3)
Gold was little changed on Tuesday as caution in the aftermath of the Paris deadly attack offset the downward pressure of a stronger Greenback and sluggish demand in major gold buyers. The US Dollar traded at its highest level in six months versus a basket of currencies, as expectations are growing that the Fed will raise interest rates by the end of the year. The much anticipated FOMC meeting and rate decision are due on December 16.
The Reserve Bank of Australia believed that ultra-low interest rates helped to underpin consumption and support the nation's economy as China's outlook remains the biggest concern, the minutes of the last board meeting showed. The central bank expected the Australian economy to strengthen gradually, while the slowdown in Asia, particularly in China, remained one of the key uncertainties and appeared to be more persistent than estimated earlier, contributing to lower commodity prices. Australia policy makers kept interest rates on hold at 2% for the past six months as the job market steadily improved and the Australian Dollar weakened, reinforcing the competitiveness of local companies. The economy is set for its best year of jobs growth since 2010 after creating 58,600 jobs in October, when unemployment slid to 5.9%, while consumer confidence surged in the past two months. Expectations the RBA will further lower its official cash rate moderated, due to strong US jobs showing, with traders pricing in a 26% chance of a rate cut by February. The RBA, in its quarterly Statement on Monetary Policy released November 6, forecast growth would accelerate to 3% in 2016 from 2.25% this year.
Canada's manufacturing sales unexpectedly declined in September to the lowest level since May, led by lower receipts in the automobile and petroleum industries, with August's data also revised downwards. Sales dropped 1.5% to C$51.1 billion, according to Statistics Canada, whereas economists had predicted a 0.2% increase. Moreover, the August figure was revised to a 0.6% drop from an earlier reading of 0.2%. Statistics Canada blamed September's decline on lower motor vehicle assembly and oil product sales. Motor vehicle assembly sales plunged 10.3% to C$5.05 billion following four months of gains. Oil companies are reducing investment as prices remain below $50 a barrel. Petroleum and coal-product sales plummeted 7.1% to C$4.83 billion in September, and dived 28% from the same month a year earlier. Manufacturing sales declined in 13 of 21 categories tracked by Statistics Canada, making up 79% of production.
Upcoming fundamentals: US inflation numbers to drive markets on Tuesday
Economists are most closely watching the month-on-month inflation statistics in the US, which will be published by the Labour Department at 13:30 GMT later today. This time consumer prices are projected to have grown by 0.2% in October, following the same decrease in the preceding month. Core inflation should continue rising by 0.2% for a second consecutive month and may hit 2% on an annual basis. This measure is an important component of the Federal Reserve's mandate when it makes decisions on interest rates every six weeks. Future markets give a 64% probability of the rate increase in December, but hiking odds may suffer in case of pessimistic data today. Meanwhile, US industrial production (14:15 GMT) is also estimated to recover by 0.1% in October, following a 0.2% drop in September.
Gold keeps sliding down with uplifted volatility
With markets expecting to see rising US CPI numbers later on Tuesday, the bullion continued to lose steam yesterday. Traders are selling-off the precious metal on the back of stronger US Dollar. The spot price is just seven dollars away from Jul low at 1,070. Positive American data may push gold below this mark, with the next bearish target being placed at 1,059 (monthly S2). On the other hand, bullish traders intend to recover back towards the 1,100 zone. Trading volume rose to the highest level since Oct 30, which underlines increasing market turbulence as Fed's December meeting approaches.Daily chart
In the one-hour chart, XAU/USD is developing in a channel down pattern at the moment. As soon as gold reaches the 1,073 level it will have a chance to commence a rebound. Any rally should be contained by 200-hour SMA/trend-line at 1,091/95 and we see the negative pressure rising over time.
Hourly chart
SWFX bullish share consolidated firmly above 70%
A huge advantage of long traders is also undeniable in the OANDA market at the moment, even though their share decreased back below the 80% mark to reach 78.26% by Tuesday morning. Additionally, more than 72% of SAXO Bank clients preserve their positive stance with respect to gold.