- Share of long trades rebounded to 55%
- Jul 17 high is the main short term bullish target (1,144)
- Key demand is now created by 2014 low/55-day SMA at 1,131
- Economic events to watch in the next 24 hours: German PPI (Jul), US Unemployment Claims (Aug 14), Existing Home Sales (Jul) and Philadelphia Fed Manufacturing Survey (Jul), Swiss Trade Balance (Jul), UK Retail Sales (Jul), Canadian Wholesale Sales (Jun), Chinese Caixin Manufacturing PMI (Aug)
Gold continued to surge above its highest level in almost five weeks on Thursday after the minutes of the Fed's most recent meeting showed that the central bank might delay a long-anticipated September rate hike. While Fed officials were satisfied with the progress in the US economy this year, they appeared concerned over the persistent sluggishness of price inflation. Some officials were worried about moving prematurely and lacking tools to respond if unanticipated events led the economy to falter, and also about threats from developments abroad, particularly slowing growth in China.
Meanwhile, the biggest decline in airline fares in almost two decades slowed consumer inflation in July after two months of slightly faster growth. According to the Labor Department, consumer price index inched up 0.1% in July, compared with the 0.3% and 0.4% increases in July and May, respectively. At the same time, core inflation, which excludes energy and food, climbed a modest 0.1% in the reported month, following the 0.2% gain in June. Measured on an annual basis, consumer prices were 0.2% higher, while core inflation rose 1.8%.
Upcoming fundamentals: UK retail sales, US home sales and Chinese PMI to be released today
Activity in the production sector of China was revised down from 48.2 to 47.8 points in July. Analysts predict to see the manufacturing PMI rising slightly to 48.1 points in August, even though the overall picture remains depressed by fears the country's economy is slowing down. On the contrary, retail sales in Britain are forecasted to grow 0.4% in July on a monthly basis, following a drop of 0.2% a month before. The UK statistics is due today at 8:30 GMT, while Chinese numbers are expected to be released by 1:45 GMT tomorrow morning.
XAU/USD to consolidate above 2014 low
Disappointing news surrounding US inflation and Fed meeting minutes provided the bullion with fresh growth momentum. As a result, XAU/USD skyrocketed above the most important short term resistance area, which was reinforced by weekly R1, 2014 low and 55-day SMA at 1,130/34. In case bulls manage to keep the price above this zone on Thursday, then our short-term outlook is going to become positive. There are still several bearish obstacles in place, while the closest supply is now located at 1,144/47 (Jul 17 high, weekly R2, upper Bollinger band).Daily chart
As the one-hour chart shows, the precious metal has finally escaped a narrow range, in which it has traded since Aug 12. Main resistances remain similar to those explained in the daily chart. However, the short-term time frame clearly indicates a necessity to stabilise above the 2014 low, which may become a reliable support line in the foreseeable future. Moreover, we should not underestimate potential influence from the 200-hour SMA, which is rapidly climbing upwards around the 1,115 mark at the moment.
Hourly chart
SWFX sentiment improves marginally
In the meantime, OANDA share of bulls stays at 61.38% of all current positions, while SAXO Bank traders are also optimistic towards gold at the moment, as there are 57% of bullish trades opened by Thursday morning.