- SWFX traders fixed profit over the weekend, by pushing the long share back to 55%
- Price volatility to be high on early Tuesday morning when Chinese GDP data is due
- Daily technical indicators are looking upwards in the run up to a busy trading week ahead
- Economic events to watch in the next 24 hours: Italian Trade Balance (Nov); German Bundesbank Monthly Report; US Bank Holiday; Chinese GDP (Q4), Retail Sales (Dec) and Industrial Production (Dec)
Gold started the trading week higher on Monday, supported by safe-haven bids after Asian stocks plunged to the lowest level since 2011. Prevailing risk-avoiding mood among investors came after a release of US retail sales data. American shoppers curbed their spending last month, fuelling concerns about the momentum in consumer spending heading into 2016. Sales at retailers declined 0.1% from the previous month to a seasonally adjusted $448.1 billion in December. The renewed weakness in the US economy fuels doubts about whether the Fed will hike rates again in March, supporting non-interest bearing assets like bullion.
American shoppers curbed their spending last month, fuelling concerns about the momentum in consumer spending heading into 2016. Sales at retailers declined 0.1% from the previous month to a seasonally adjusted $448.1 billion in December, according to the Commerce Department. Retail sales rose 0.4% in November, compared with an initially reported 0.2% gain. From a year earlier, sales grew just 2.1% in 2015, marking the slowest increase in the six-year expansion. Consumer spending is a key catalyst of the US economic growth, representing more than two-thirds of economic output. Household consumption has helped the world's number one economy grow in recent quarters despite a stronger Dollar and weak demand overseas, which have hit US exporters. A separate report showed US producer prices declined in December, underscoring persistently low inflation. The producer price index, which measures the prices companies receive for goods and services, dropped 0.2% in December, the Labor Department reported. Excluding volatile food and energy categories, core prices inched up 0.1%. Overall producer prices were down 1.0% in December from a year earlier, the 11th consecutive year-over-year decline. Core prices increased 0.3% from a year earlier.
Industrial production of Japan's mines, manufacturers and utilities dropped on month in November, a revised data from the Ministry of Economy, Trade and Industry showed. Japan's industrial output declined 0.9% on a monthly basis, but gained 1.7% year-on-year in November. This compared with economists' expectations for a rise of 1.0% and 1.6% on a monthly and annual basis respectively. The decrease came in light of slowdown in China, Japan's top trading partner and destination for a large proportion on Japan's exports. Moreover, sluggish domestic demand has also hit industrial production, with a fall in private demand forcing the Bank of Japan and government to weigh whether or not to deploy more stimulus measures in order to prevent the economy to slip back into recession. Bank of Japan Governor Haruhiko Kuroda reiterated that the world's third biggest economy is likely to continue recovering moderately despite slowing growth in emerging economies. Kuroda also repeated the central bank's commitment to continue its aggressive easing as long as it is necessary to reach and maintain its 2% inflation target.
Upcoming fundamentals: All eyes on China as crucial growth data is due on Tuesday
Market participants are setting eyes on Chinese economic growth data, which will come out at 2:00 GMT in the morning on Tuesday. Fuelled by additional data releases on industrial production and retail sales, these events are highly likely to give the markets some reasons for uplifted turbulence. Alongside, US markets are not working on Monday, meaning the attention is immediately shifting to the world's second largest economy. As for the expected Chinese numbers, it seems that the country's economy expanded by around 6.9% in 2015 and totalled more than $10 trillion. The pace of advance has probably slowed from 7.3% in 2014, with services industry now accounting for 50% of the whole output. Manufacturing and internal trade data will be released for the month of December, with the former and latter estimated to rise by 6% and 11.3% on a yearly basis, correspondingly.
Gold ends volatile trading week below 1,090
Gold prices have swung between gains and losses since Tuesday, and on Friday they climbed from the 55-day SMA (1,077) to grow up to 1,088 by the end of US session. During the Asian trading on Monday the bulls are hoping to push it higher into the 1,095 area and, possibly, up to the current January high at 1,113 in the medium-term. Bank Holiday is the US should curb volatility on Monday, while many bullish catalysts in face of global market instability can be absent today. Still, supported by positive daily technical indicators the metal is capable of retaking 1,095 in the next 24 hours.Daily chart
Outlook for the precious metal is mainly unclear in the one-hour chart. On the one hand, prices have confirmed the bearish pattern's upper boundary and December 2015 high at 1,088. However, the 200-hour SMA at 1,092 remains largely intact, and only a success here will put at risk much higher levels including the 1,100 psychological mark and October 2015 low at 1,104.
Hourly chart