- Almost three fourths of traders are bulls
- Gold is likely to stay bearish until it hits 2010 low
- Key supply is at 1,104/00
- Average forecast for the end of October is 1,144
- Upcoming events: Chicago PMI (Jul), Revised UoM Consumer Sentiment (Jul), US Employment Cost Index
Gold declined to the lowest level in more than five years on Friday and headed towards a sixth consecutive weekly fall, the longest retreat since 1999, after US data supported expectations for an interest rate hike in the near term. The precious metal was also poised to end July with its biggest monthly decrease in more than two years after sharp losses last week further shook investor confidence, with more losses expected ahead.
US economic growth accelerated in the April-June quarter as an increase in consumer spending offset the drag from weak business spending on equipment. The US GDP grew a 2.3% annual rate, according to the Commerce Department, while the first-quarter economic output was revised to show a growth of 0.6%, up from a negative 0.2%.
Expect increased turbulence between 12:30 and 14:00
Today's defining time interval for gold is supposed to be between 12:30 and 14:00 GMT. The period will start with the US employment cost index, growth of which is estimated to slow down. According to the consensus forecasts, the following two releases, namely Chicago PMI and UoM consumer sentiment, are expected to improve compared to their previous values.
XAU/USD gains bearish momentum
XAU/USD is under heavy selling pressure at the moment, which should be enough to take the price down to the 2010 low eventually. Once the July 20 and 24 lows are surpassed, there will be no significant barriers to test 1,045, although it should be noted that on Monday we will have new weekly and monthly pivot points. Beyond the 2010 low lies the 2008 high at 1,032. In case of an alternative course of events, namely violation of 1,104/00, this will expose the 2014 low at 1,132. Meanwhile, the technical indicators are mixed, meaning expected depreciation of gold to the target levels may take some time.Daily chart
Hourly chart does not give much more insight into the situation. The 200-hour SMA is currently above the spot, and this increases the downside risks for the precious metal during today's trading session. It also seems that it might take some time before Jul 24 low is breached.
Hourly chart
Almost three fourths of traders are bulls
Bullish sentiment of SAXO Bank traders is somewhat weaker: 71% of them are currently long gold. Bullish sentiment of OANDA traders is even less pronounced, but is nevertheless relatively strong - 66% of positions are long.