- 52% of all SWFX open positions are short on Monday
- Prices reached above the 1,350 level on Wednesday
- A fall was caused by US Non-Farm Payrolls data on Friday
- Economic events to watch over the next 24 hours: US JOLTS Job Openings (June); US Monthly Budget Statement (July); DOE Crude-Oil Inventories (August 5)
Before retiring in September, the Reserve Bank governor, Glenn Stevens has admitted the RBA faces a difficult job due to necessity to balance between various risks as well as that it could undershoot its inflation target if that is the "least bad option". Also, Mr. Stevens defended his and the bank's record for the past decade of keeping inflation within the 2-3% target range on average, as well as maintaining strong economic development and unemployment rate between 5-6%. Mr. Stevens outlined that the RBA's 2-3% inflation target was no longer valid, by giving deflationary pressures locally and in the global economy. Meanwhile, the RBA last week forecasted inflation will remain below the target till the end of its forecast horizon in December 2018. Moreover, some economists insists the target needs to be lowered, as there are growing risks associated with lowering interest rates too far to seek a high inflation outcome. For example, a surge in already high house prices. On top of this, Mr. Stevens noted that slowing growth in the working-aged population and reduced productivity growth affects negatively on economic expansion. "All of this points to the need not only to calibrate our assumptions about future growth prudently, but also to maximize our efforts in those areas that can lift potential growth - productivity," he said. That does not mean the absence of further interest rate cuts, but it does mean that the Reserve Bank will be keeping a close eye on runaway housing prices that create financial stability risks.
UK manufacturing and industrial production continued to contract in June amid Britain's decision to leave the European Union, official data from the Office for National Statistics (ONS) revealed on Tuesday. Manufacturing output dropped 0.3% on an annual seasonally adjusted basis in June, while market analysts expected the indicator to come in at 0.0%. Meanwhile, May's figure was revised down to a 0.6% decline from an originally reported 0.5% fall. On an annual basis, Britain's manufacturing production rose 0.9% in the same month, compared to May's upwardly revised reading of 1.7%. Furthermore, the data showed that overall industrial production grew 0.1% month-over-month on a seasonally adjusted basis in June, following the previous month's downwardly revised drop of 0.6%. Economic desks anticipated a 0.1% fall in the sixth month of the year. Year-over-year, industrial output increased 1.6% in the reported month, compared to May's 1.4% hike. Other data released by the ONS showed that the country's trade deficit widened more than expected in June. The UK's trade gap rose to $12.4 billion in the reported month, compared to last month's upwardly revised gap of $11.5 billion, while economists expected to see a $9.6 billion deficit in June.
Upcoming fundamentals: US Monthly Budget and JOLTS Job Openings
Gold today will be affected by data releases coming from the United States, as the JOLTS Job Openings for June and the US Monthly Budget Statement for July will be released. First out will be the JOLTS Job Openings, which will be published at 14:00 GMT and the forecasted number is five and a half million. The monthly budget is set to be out at 18:00 GMT, and the forecast is a negative 129 billion US Dollars. In addition, the bullion traders have to keep their eyes open for the DOE Crude-Oil Inventories data, as oil inventories affect not only crude prices, but subsequently other commodities also.
Gold surges past pivot points on Wednesday
Daily chart: The yellow metal started to surge on Tuesday, and it continued the movement on Wednesday, as by 5:00 GMT the metal had passed resistance put up by both the monthly and the weekly pivot points at 1,345.31 and 1,345.68. As the daily aggregate technical indicators forecast a surge for the commodity during the rest of the session, it is most likely that the will not struggle much with the weekly R1 at 1,356.64. Further above that is located the upper Bollinger band at 1,367.57, which most likely will bend, as gold gains value.Daily chart
Hourly chart: The hourly chart for Gold shows, that the yellow metal's surge was hindered by the 20-hour SMA from midday on August 8 to 13:00 GMT on August 9, when the commodity surged to 1,339.52. In this surge the bullion passed the 55-day SMA at 1,337.72. The upper Bollinger band managed to stop the surge for eight hours. However, by 22:00 GMT the 20-hour SMA had moved upwards and provided support, which initiated a continuation of the surge. Since then the metal has surged without being slowed down. In that surge gold ignored the 100 and 200-hour SMAs and the monthly and weekly pivot points.
Hourly chart
SWFX sentiment bearish on Wednesday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 61.88%. In the meantime, SAXO bank clients are less bullish on the yellow metal, as 55.28% of positions are long, which is almost less by 10%, compared to 64.45% on Tuesday.