- 53% of all SWFX open positions are bearish
- Prices fluctuate around 1,315 level
- Gold surged on release of the UK Referendum results and following uncertainty
- Economic events to watch over the next 24 hours: US Initial Jobless Claims (June 25); Chicago PMI (June); Fed's Bullard Speaks
The US economy expanded more than previously estimated during the first three months of the year, but not as sharply as previously estimated, moreover, the overall trend remains vulnerable to a new round of global economic turmoil. According to the Commerce Department, gross domestic product, the most important measure of goods and services produced across the US, advanced 1.1% at an annual pace in the first quarter, showing the weakest pace in a year. Also, the agency previously forecasted the economy rose at a 0.8% pace. The following announcement confirms that the economy has regained momentum in the second quarter. Nevertheless, uncertainty following last Thursday's "Brexit" referendum poses a risk to the growth outlook. In the meantime, the US consumers became more confident in the economy in June since the Conference Board release showed the index went up to 98 from 92.4 in May. Moreover, Americans outlook of current economic conditions was the most positive since September. However, despite the following jump in June's readings, consumers are still relatively cautious about economic growth in the short term.
Activity in the US services sector remained tepid in June, suggesting that the economy's underlying rate of growth remains lowly and that a rate hike may not be on the cards too soon. In a report, market research group Markit said that its flash services purchasing managers' index remained unchanged at 51.3 in June for the second month, falling short of expectations for a rise to a reading of 51.9. Although it remained above the 50.0 mark that separates contraction from expansion, it was well below the long-run survey average of 55.6. Meanwhile, an increase in the amount of goods flowing into the US in May likely reduced the extent to which trade will boost economic growth in the second quarter. A separate research showed that the deficit on trade with goods widened to $60.6 billion in May, compared to a $59.4 billion gap projected by analysts. Last month's reading follows a $57.5 billion trade shortfall in April, fresh numbers from the Department of Commerce reported. It turns out that exports were soft in May and imports rose. US exports inched down 0.5% to $119 billion. Imports increased 1.4% to $179.6 billion, the highest level so far this year. The rise in in-bound shipments largely reflected greater volumes of industrial supplies and consumer goods.
Upcoming fundamentals: US data in the focus
In the second half of the day on Thursday, the US statisticians are set to wake up and publish information. Initial Jobless Claims for the week of June 25 will be released at 12:30 GMT, and they will be followed by the Chicago PMI for June at 13:45 GMT. The Initial Jobless Claims are expected to be at 267,000 this week. However, the Chicago PMI is forecasted to show positive sentiment, as the experts have set the number at 51. The busy day will end with a speech from the Fed voting member Bullard at 18:00 GMT.
Gold fluctuates around 1,315 on Thursday
Daily chart: The yellow metal gained strength on Wednesday, as it surged from 1,310.21 to 1,319.06 by the end of day's trading session. At the start of Thursday, the bullion declined to 1,315.60 by 5:15 GMT. The metal has been slowly but steadily losing value this week, as the risk on sentiment returns in the aftermath of the British referendum on EU membership or Brexit, which turned out to indicate that a majority of UK voters want to leave the EU, and it made traders dump European currencies and surge to safe investments like gold.Daily chart
Hourly chart: The hourly chart shows that the yellow metal steadily scored gains on Wednesday, as it moved past the 20 and 55-hour SMAs and curved the upper Bollinger band. However, in the evening the bullion lost half of day's gains, as it fell from 1,325 to 1,315 from 18:00 GMT until midnight. In addition, the metal has passed three SMAs, and it remains almost unchanged just below them around 1,315. Although, aggregate daily technical indicators forecast a surge for the metal today.
Hourly chart
SWFX trader sentiment stays unchanged
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 66.36%. In addition, SAXO bank clients are also bullish on the yellow metal, as 55.69% of positions are long.