- Bullish SWFX market share is flat at 52%
- Prices report little changes before major US fundamentals and FOMC meeting
- Daily technical indicators are giving slightly positive signals
- Economic events to watch in the next 24 hours: Euro zone M3 Money Supply (Sep); US Durable Goods Orders (Sep); Services PMI (Oct) and CB Consumer Confidence (Oct); UK GDP First Estimate (Q3); Japanese Retail Sales (Sep)
Gold treaded water near $1,160 an ounce on Tuesday as investors are awaiting the Fed's policy meeting that starts later in the session. The US central bank is expected to keep rates unchanged, with market participants remaining doubtful that the Fed will raise borrowing costs before the end of the year. Fed policy makers have been concerned about slowing global growth and an effect of a stronger US Dollar on the nation's economy. As a result, central bankers have been sending mixed messages regarding the timing of the interest rate hike in nearly a decade.
Meanwhile, New Zealand's trade deficit unexpectedly widened in September as dairy exports dropped, whereas imports remained stronger than predicted. According to Statistics New Zealand, the trade shortfall rose to $1.22 billion in September, compared with $1.08 a month earlier and economists' consensus forecast of the $825 million deficit. Exports climbed 2% year-on-year to $3.7 billion, driven by a 33% surge in meat products. At the same time, dairy exports continued to decline, plunging 22% over the same period. Whole-milk powder, the country's top export earner, plummeted 32% last month compared with September 2014. Meanwhile, imports dropped 1.3% to $4.91 billion on an annualized basis.
Upcoming fundamentals: UK economy to stay strong in Q3
Today we are going to watch the British preliminary data on economic growth in the third quarter of 2015, one of the most important and influential indicators released on a quarterly basis. According to Final GDP numbers, the UK economy grew by 0.7% in April-June and is projected to gain 0.6% in the three months through September. On the annual basis the expansion is forecasted to hold unchanged at 2.4%. Positive numbers will raise expectations the Bank of England may deliver a rate rise faster than expected, which should give additional impetus to the Pound. Gold may also react positively on the back of weaker US Dollar, but strength of important fundamentals is not always bullish for the precious metals as well.
Gold treads water before FOMC rate decision
Prices of the bullion have been largely unchanged in the past three trading days, even though the metal registered slight losses during each of those 24-hour periods. Short term projection for Tuesday remains neutral, as long as gold holds below 1,167/70 (weekly PP/Aug high) or above 1,158/55 (20-day SMA/weekly S1). On the other hand, US durable goods data may provide the positive impetus in case of disappointing numbers. Any extra volatility should be created tomorrow when the Fed will make an interest rate decision.Daily chart
The one-hour chart gives a clearer bearish signal for the precious metal. By continuing to trade inside the channel down pattern, additional supply is offered by the 200-hour SMA at 1,172 and Aug high at 1,170. Gold will be driven by important US fundamentals this week, but the key one-hour technical target favours bears at 1,154/52 (recent downtrend).
Hourly chart
SWFX sentiment unchanged at 52%
Meanwhile, OANDA's positive market sentiment improved even more from 52.66% yesterday to 53.70% on Tuesday morning. In addition, 57% (56% on Monday) of SAXO Bank clients continue to assume that the precious metal is going to gain value.