- 51% of all SWFX open positions are short
- The yellow metal traded in a short term ascending channel for almost a month
- The recent surge was caused by the US presidential election
- Economic events to watch over the next 24 hours: US Unemployment Claims; US ISM Non-Manufacturing PMIe
As data released yesterday, US crude oil stockpiles advanced more than 14 million barrels during the previous week, showing the largest weekly build since the US Energy Department started keeping records back to 1982. As data suggests, West Texas Intermediate crude prices drop 1.13% with the report's release, stabilizing at $46.33. Brent prices, in turn, went down 1.42% at $47.92. Nevertheless, oil had rallied earlier on Wednesday on a sliding dollar, and after Colonial Pipeline had to shut down its main pipeline for a second time in as many months following an explosion. Overall, oil prices tumbled around 3% yesterday after a record weekly build in US crude stocks added to worries of all-time highs in OPEC production. In the meantime, the deal in Doha fell apart as OPEC's biggest producer Saudi Arabia would not accept Iran's position that it is their sovereign right to increase output. The general purpose of the most recent meeting was to finalize details of supply cuts and how cartel members and non-members led by the Russia will share the cuts. Although, the non-OPEC members including Azerbaijan, Brazil, Kazakhstan, Mexico, Oman and Russia together produce 21% of global supply or around 19.6 million barrels each day.
US manufacturing activity grew for the second consecutive month in October, official data showed on Tuesday. The Institute for Supply Management said its Manufacturing Purchasing Managers' Index jumped to 51.9 points in October, following the preceding month's reading of 51.5 and surpassing the 51.8 market forecast. The October growth was mainly driven by a rise in production and hiring. Any reading above the 50 point level 50 indicates an expansion in the manufacturing sector, which accounts for about 12% of the US economy. Meanwhile, the Production Index rose 1.8% to 54.6 points, while the New Orders Index dropped to 52.1 from the previous month's 55.1 and the Employment Index increased 3.2% to 52.9 during the reported period. The Export Orders Index rose slightly to 52.5 from the prior month's figure of 52. Analysts widely expect manufacturing activity to pick up in the Q4. The US manufacturing sector was hit by the strong US Dollar between June 2014 and December 2015, as the appreciation of the Greenback hampered US exports. The Federal Reserve began a two-day policy meeting on Tuesday and it is unlikely to raise interest rates at this meeting ahead of the presidential election on November 8. However, analysts widely anticipate a December rate hike.
Upcoming fundamentals: US unemployment and a PMI
There are two data releases, which actually will affect the strength of the Greenback, as at 12:30 GMT US Unemployment Claims and at 14:00 GMT US ISM Non-Manufacturing PMI will be released.
Gold stops just below 1,310
Daily chart: The yellow metal surge on Thursday morning, as it managed to break the resistance of the weekly R2 at 1,296.73 and the 55-day SMA at 1,300.38. However, previously during Wednesday's trading session the rate had reached almost the 1,310 mark, as it stopped at 1,308 and reversed its movement until it ended the day's trading at 1,295.60. Due to politics dictating the strength of the underlying US Dollar, it is most likely that the metal will continue to surge, as the intrigues of the US presidential election seem to just start to unfold.Daily chart
Hourly chart: The hourly chart for the yellow metal reveals, that the reversal at 18:00 GMT was not caused by any technical level. One explanation that our analysts propose are that, as the US trading session began, some time passed, and the US market participants decided to take out profits, which caused the metal to fall. Moreover, one more fact can be mentioned. Just as on the EUR/USD currency pair, the weekly resistance levels manage just to hold off the metal from surging for two hours.
Hourly chart
SWFX sentiment almost neutral
During the OANDA open long positions have decreased to 69.58%, compared to 73.77% on Wednesday. SAXO bank traders remain long, but have continued to largely decrease their long positions, as 52.90% of traders are long, compared to 59.13% during the previous trading session and 68.44% on Tuesday