- 56% of all SWFX open positions are short, as the sentiment became bearish on Monday
- Prices surged to fluctuate at 1,363 mid-Thursday
- Gold has been bouncing off of the weekly R1 all this week
- Economic events to watch over the next 24 hours: US Change in Nonfarm Payrolls (July); US Trade Balance (June); US Unemployment Rate (July); US Change in Manufacturing Payrolls (July); Participation Rate (July); Baker Hughes US Rig Count Change Crude Oil (August 5))
As markets expected, the Bank of England (BoE) introduced a range of additional monetary policy measures and upgraded its growth and inflation forecasts at its August meeting on Thursday amid Britain's decision to leave the European Union. All nine members of the Monetary Policy Committee voted anonymously to cut the main lending rate to a record low 0.25% from 0.50%. Furthermore, the central bank expanded its quantitative easing (QE) programme to 435 billion pound from 375 billion pound, while markets expected the BoE to leave its QE scheme unchanged. Three of nine policymakers voted unanimously against the decision. The latest batch of surveys showed that the UK economy contracted at its steepest pace and may even slip into recession following the Brexit vote, however, the BoE kept its 2016 economic growth forecast unchanged at 2.0%, as the UK economy had a stronger than expected performance in the first half of the year. Nevertheless, the central bank lowered its 2017 growth forecast to 0.8% from an earlier estimate of 2.3%, while the 2018 estimates were slashed to 1.8%. Moreover, the BoE increased its 2018-2019 inflation forecast to 2.4% amid weakness in the Sterling.
The number of Americans filing for unemployment benefits increased to 269,000 in the week ended July 30, compared to the preceding week's reading of 266,000, whereas market analysts pencilled in a slight drop to 265,000 in the reported period, fresh figures from the Department of Labour showed on Wednesday. The 269,000 initial jobless claims figure reported last week marked 74 consecutive weeks of claims under the 300,000 level, the longest streak since 1973. The data also showed that the four-week moving average of claims, considered a better measure of labour market trends, grew 3,750 to 260,250 in the reported week. A Labour Department analyst highlighted that there were no special factors influencing last week's claims data. In the meantime, the number of continuous jobless claims fell 6,000 to 2.14 million in the week ended July 23, while the four-week moving average jumped 5,250 to 2.14 million. Last week's claims report has no impact on the NFP data for July, set for release on Friday. Economic desks forecast nonfarm payrolls to show growth of 180,000 for the seventh month of the year, following June's hike of 287,000.
Upcoming fundamentals: US employment, trade and oil rig count
Once again the US will direct the yellow metal, because, as it is well known, gold is traded in US Dollars. Most of the data will be published at the same time, at 12:30 GMT. The most important of data on the list are US Change in Nonfarm Payrolls for July, the US Trade Balance for June and the US Unemployment Rate for July. Moreover, the pair will be affected by the Change in Manufacturing Payrolls and the Participation Rate. In addition oil prices might affect other commodities on Friday, as the weekly Baker Hughes US Rig Count will be published at 17:00 GMT.
Gold struggles with resistance on Friday
Daily chart: The yellow metal continues to fluctuate just below the level of 1,365, which it reached on Monday. The fluctuations are caused by the fact, that the metal keeps reaching and bouncing off the first weekly resistance at 1,366.06, which until Friday was also support by the upper Bollinger band. The Bollinger band has moved higher on Friday, as in the past four trading sessions it has moved from 1,364.05 level on early Monday morning to 1,371.58 by 5:15 GMT on Friday. It is most likely, that the commodity will be stuck at this level until next week.Daily chart
Hourly chart: On the hourly chart it can be seen that gold traded flat up to 10:00 GMT on Thursday, and then it suddenly surged. The reason for that was the Bank of England rate decrease from 0.5% to 0.25% and a massive increase in quantitative easing due to the effects on the UK's economy on Brexit. Investors flocked to safe investments, as the yellow metal surged to 1,363.63 by 13:00 GMT. Afterwards, the meal moved slightly lower to 23:00, and after that the bullion has surged to 1,364.50 by 6:00 GMT.
Hourly chart
SWFX traders bearish on Friday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 57.06%. In the meantime, SAXO bank clients are less bullish on the yellow metal, as 55.15% of positions are long.