- SWFX traders trimmed their long positions and pushed the bullish share down to 56%
- Outlook is positive after successful testing of 1,070; the next target is monthly PP at 1,086
- Aggregate daily technical studies are now supporting the bullish scenario
- Economic events to watch in the next 24 hours: Italian Trade balance (Nov); US Final GDP (Q3), Personal Consumption Expenditures (Q3), Existing Home Sales (Nov) and Richmond Fed Manufacturing Index (Dec); UK Public Sector Net Borrowing (Nov); New Zealand Trade Balance (Nov)
Meantime, gold kept gains from a two-day rally on Tuesday, boosted by a weakness in the US Dollar. However, a plunge in oil prices and uncertainty over the pace of future US interest rate hikes limited the precious metal's upside potential. The Fed's pledge to raise rates gradually means the US central bank will not increase borrowing costs at every meeting, Atlanta Fed President Dennis Lockhart said. Meanwhile, assets in SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, dropped 0.46% to 645.94 tonnes on Monday, close to a seven-year low.
British retail sales grew slightly less than expected in the run-up to Christmas and the outlook for January sales figures was weak, according to the Confederation of British Industry's survey. The retail sales balance climbed to +19 in December from a nine-month low of +7 in November, albeit it was below a median forecast of +21. The findings showed Black Friday shopping spree and promotions were among the main drivers, with internet sales volumes surging at their quickest pace since April. Among the sectors, food outlets reported robust sales, as did clothing shops, whereas footwear and leather sales growth fell. According to the official data, retail sales rebounded sharply in November by 1.7%. A less volatile quarterly gauge of total sales volumes in the three months to November showed an advance of 2.1%, which was the 23rd straight month of quarterly growth, and up from a rise of 1% in the third quarter, the ONS said. British consumers have fuelled the country's economic recovery over the past two years, helped by a plunge in inflation to around zero. However, wage growth remains weak and has not recovered its levels of before the financial crisis.
Upcoming fundamentals: US GDP and UK government borrowing
Apart from American data releases, which include GDP, home sales and the Richmond Fed Manufacturing Index, there are several fundamental reports that markets are going to pay attention to in course of the Tuesday's trading session. In Britain, the public sector net borrowing data is due at 9:30 GMT. It will be closely watched amid disappointing numbers last month, as David Cameron's government is trying to deal with high budget deficit left after the financial crisis. According to the mean analysts' forecasts, the UK budget shortfall was seasonally-high at 11.9 billion pounds in November. It proclaims a climb from 7.5 billion pounds in October and a decrease from 13.4 billion pounds in November 2014. In New Zealand, the trade balance data will be out at 21:45 GMT. The deficit is estimated to narrow to $812 million in November, down from $963 million in October. The negative trade gap averaged around $1 billion over the past three months.
Gold skyrockets past 1,075 to expose 1,086
A rally, which commenced last Friday, has been successfully prolonged during the past 24 hours. Gold advanced above the July low and 20-day SMA to close slightly below the weekly R1 at 1,077. Now the focus is shifting to the monthly pivot point at 1,086, which is strengthened by the upper Bollinger band and the current December high. Moreover, daily technical indicators are now expecting the bullion to climb. However, bearish risks are created by the 55-day SMA (1,105), which has recently managed to cross another moving average on the longer-term 100-day time frame.Daily chart
In the one-hour chart, the yellow metal has been hovering around the 200-hour SMA since the beginning of this month. It proclaims that the moving average has been unable to provide gold with either bullish or bearish momentum so far. Nonetheless, XAU/USD's present location above this line tends to support the positive scenario.
Hourly chart
Bears gain ground amid profit-taking
In addition to that, OANDA bears were successful in expanding their presence in the market on the first working day of this week, while SAXO Bank sentiment is largely steady for the moment. Long OANDA clients are now holding around 68% of all open positions, down three percentage points. The same percentage of bullish trades is being held by SAXO Bank traders on Tuesday morning.