- 57% of all SWFX open positions are long
- Gold opened Tuesday's session at 1,254.81
- The 1,250 psychological level provided support for a week
- Economic events to watch over the next 24 hours: US CPI data
Industrial production in the United States rose less than expected last month, suggesting the economy grew at a moderate annual pace in the Q3. The Federal Reserve revealed on Monday the country's industrial output advanced 0.1% in September, compared to the preceding month's downwardly revised fall of 0.5%, while market analysts anticipated a rebound of 0.3% in the reported period. On an annual basis, industrial production increased 1.8% in the Q3, marking the first quarterly rise since the Q3 of 2015. Manufacturing output as well as mining output rose 0.2% and 0.4% in September, respectively, while utilities output fell 1.0% in the same month. The industrial sector was badly hurt by the strengthening US Dollar and surging price of oil between June 2014 and December 2015. Also, it was hampered by businesses' efforts to reduce an inventory overhang. However, the recent stabilization of the US Dollar and oil prices suggest a significant rebound in industrial production. In addition, capacity utilization declined to 75.4% during the ninth month of the year, down from last month's 75.5% reading, while economists anticipated a slight increase to 75.6% during the reported period.
US retail sales rose more than expected last month, official data revealed on Friday. According to the US Department of Commerce, retail sales grew 0.6% month-over-month in September, in line with analysts; expectations, whereas the preceding month's figure was revised up to -0.2% from the originally reported reading of -0.3%. On an annual basis, retail sales rose 2.7% in the reported month. Excluding automobiles, building materials, food services and gasoline, retail sales advanced 0.5% in September, following August's upwardly revised drop of 0.2% and surpassing the 0.4% rise forecast. The September growth was mainly driven by sales of automobiles, which rose 1.1% in September after falling 0.3% in August. Other data released by the Department of Labor on the same day showed the Producer Price Index climbed 0.3% in September, compared to last month's 0.0%, while analysts anticipated an increase of 0.2% during the reported period. Year-over-year, the PPI jumped 0.7%, posting the biggest increase since December 2014. Currently, The Atlanta Fed is expecting the US economy to expand at an annualized pace of 2.1% in the Q4 after growing 1.4% in the Q3.
Upcoming fundamentals: US CPI data
This Tuesday market participants are set to concentrate on the US CPI data, as the consumer price index data will be published at 12:30 GMT. The CPI data release is set to move the markets and financial instruments, and currency exchange rates, which involve the US Dollar. Although, the US NAHB Housing Market Index and TIC Long-Term Purchases are set to also be released during the day, these data releases are not even likely to impact the strength of the Greenback by 0.1%.
Gold moves higher
Daily chart: The yellow metal is free from fluctuations above the 1,250 level, above which it had bounced up and down for the past week. On Monday morning, the bullion began what seemed to be another slight surge, and it turned out to be just that with one minor exception. The commodity price moved above the newly formed pivot point at 1,253.84, which now is providing support to the metal. On Tuesday morning gold was already pounding on the next resistance level represented by the weekly R1 at 1,261.62. However, it is possible that the metal will bounce off the resistance.Daily chart
Hourly chart: The hourly chart for gold reveals that there is a minor, short term ascending channel patter, in accordance with which the metal's surge is occurring. Moreover, it can be seen that the commodity price has moved above all of the notable simple moving averages, and the bullion has even began to bend the upper Bollinger band.
Hourly chart
Traders remain bullish
Meanwhile, OANDA Bank clients remain majorly bullish with respect to the bullion, as on Tuesday morning 76.72% of all positions were long. In the meantime, SAXO bank clients show a similar trend with 64.34% of all positions being held by bulls.