- 61% of all SWFX open positions are long
- 58% of pending commands were to buy the metal
- Gold opened Wednesday's session at 1,132.35
- Economic events to watch over the next 24 hours: US Existing Home Sales
Both building permits and housing starts dropped more than expected last month, suggesting that the Q4 growth rate could be possibly revised downwards. According to the US Department of Commerce, new-home construction fell 18.7%, the biggest decrease in almost two years, to a seasonally adjusted annual rate of 1.09 million units in November, while market analysts anticipated a slight deceleration to 1.23 million during the reported period. Housing starts tend to be volatile on a monthly basis. Meanwhile, the October figure was revised up to a 1.34 million-unit pace, the highest level since July 2007, from the originally reported 1.32 million. The Commerce Department also reported that building permits declined 4.7% to an annualized rate of 1.20 million units, following October's upwardly revised reading of 1.26 million, whereas economists expected them to decrease to a 1.24 million unit pace. Nevertheless, the National Association of Homebuilder's sentiment measure, released on Thursday, jumped to 70 points in December, the highest level in 11 years, compared to the previous month's figure of 63. December's increase was driven in large part by Donald Trump's surprise victory in the US presidential elections last month.
US consumer prices rose at a slower pace last month compared with October but the underlying inflation trend remained promising. On Thursday, the US Department of Labor said its Consumer Price Index advanced 0.2% in November after rising 0.4% in the preceding month as food costs moderated and the price of gasoline fell. On an annual basis, the CPI climbed 1.7%, the largest increase since October 2014, following the previous month's 1.6% gain. Analysts expected the CPI grow 0.2% on a monthly basis and 1.7% compared to a year ago in the reported month. Meanwhile, the so-called Core CPI jumped 0.2% in November after climbing 0.1% in October, driven by higher rents. Despite last month's increase, the annual core inflation rate held steady at 2.1%. Other data released on the same day showed the US Philly Fed Index jumped to 21.5 in November, up from October's 7.6 and well above forecasts of 9.1 points, whereas the Department of Labor reported the number of initial claims dropped 4,000 to 254,000 in the week ending December 10, compared to the preceding week's 258,000. After the release, the US Dollar was seen trading at 1.0419 against the Euro, 117.99 against the Japanese Yen and 1.2470 against the British Pound.
Upcoming fundamental releases: US Existing Home Sales
After a quiet first half of the week, in the US the Existing Home Sales data is set to be published at 15:00 GMT. This data release is marked as a medium impact by most experts, who develop economic calendars. However, in the recent past the fundamental data release has had little impact on the strength of the US Dollar.
Gold moves higher on Wednesday morning
Daily chart: On Wednesday morning the yellow metal regained Tuesday's losses, as the bullion surged back above the 1,135 level. Due to the fact that the US Dollar strengthened in the meantime, reasons for this move initially seem unclear. However, by investigating further it was revealed that the jump might have been caused by the fact that the Russian Central Bank has released information that it has been heavily increasing its gold reserves. Meanwhile, the medium term downtrend still persists, and the commodity price is still set to fall.Daily chart
Hourly chart: The hourly chart for Gold shows that the bullion reversed its direction after finding support in the lower Bollinger band at 15:00 GMT on Tuesday, and that occurred at the 1,125.69 mark. In the aftermath of the change in direction the yellow metal surged until it was stopped by the combined resistance of the 55 and 100-hour simple moving averages. It is likely that the metal will be pressured lower by these SMAs.
Hourly chart
Trader sentiment unchanged
The optimistic OANDA Gold traders have found the Bullion more attractive on Wednesday, as open positions were 75.81% long, compared to 72.02% on Tuesday. Meanwhile, traders of SAXO bank seem to have decreased their bullish stance, as Wednesday showed 67.21% of traders betting the metal will surge, compared to 69.91% during the previous session.