- Share of long trades decreased further from 57% to 55%
- Bulls are focusing on 2014 low at 1,131
- Key demand is now provided by monthly pivot point at 1,113
- Economic events to watch in the next 24 hours: Euro zone Trade Balance (Jun), German Bundesbank Monthly Report, US Empire State Manufacturing Index (Aug), RBA Monetary Policy Meeting Minutes
Gold remained flat on Monday after retreating from the highest level in three weeks, as more positive data from the US supported the Greenback and the case for the Fed to raise interest rates in September. China's unexpected devaluation of the Yuan last week helped bullion recover some ground, but the precious metal erased some of those gains amid speculation Beijing was unlikely to pursue a sustained depreciation of the nation's currency. This week investors will be waiting with great anticipation for the Fed's July meeting minutes due on Wednesday, which are expected to offer some important clues about the central bank's plan to lift its rates for the first time since 2006.
Meanwhile, US producer prices climbed for a third consecutive month in July, but inflation pressures remained weak amid lower oil prices and a strong US Dollar. The Labor Department reported its producer price index for final demand edged higher 0.2% last month after rising 0.4% in June. Core prices, which strip out volatile energy and food components, were up 0.3% in July. However, in the 12 months through July, the PPI dropped 0.8% after decreasing 0.7% in June. It was the sixth straight 12-month decline in the index. Producer prices and other inflation gauges have broadly fell over the past year against the backdrop of cheaper oil, a stronger Greenback and weak global demand.
Upcoming fundamentals: NY manufacturing index, RBA minutes in focus
The main gauge, which shows activity in the manufacturing sector of the New York state, is estimated to pick up from 3.9 to 5 points in August on a monthly basis. A reading above zero indicates improving conditions in the industry, and markets are expecting to have this data by 12:30 GMT today. Meanwhile, the Reserve Bank of Australia will publish the minutes of its most recent meeting in the night between Monday and Tuesday, where analysts are intended to find out any hints of further rate cuts in the foreseeable future.
XAU/USD unchanged above monthly PP
Volatility of gold prices was subdued on Friday, resulting in no changes over the course of trading session. At the moment some support is provided by the monthly pivot point around 1,113, while additional demand is placed three dollars below at 1,110 (weekly PP). Despite that, our outlook remains neutral, as difficulties to move in any direction are created by high density of technical levels around the spot price. Any possible attempts of bulls are likely to be capped by the 55-day SMA and weekly R1 in the 1,130-1,137 area.Daily chart
The one-hour chart shows a rapid pace of XAU/USD's recent advance in value, even though the growth seems to have stalled around 1,120. Short term gains are possible, as long as the bullion keeps trading above its 200-hour simple moving average, currently at 1,102.
Hourly chart
SWFX sentiment still below 60%
In the meantime, OANDA share of bulls stays at 65.47% of all current positions, while SAXO Bank traders are also firmly optimistic towards gold at the moment, as there are 62% of bullish trades opened by Monday morning.