- 67% of all SWFX positions are short, a six pp relief for bullish side
- Bulls to attempt pushing gold back above weekly S1 at 1,269.33
- Daily and next week's technical signals are bullish
- Economic events to watch over the next 24 hours: US Monthly Budget Statement (Apr) and Crude Oil Inventories (May 6); UK Manufacturing and Industrial Production (Mar); UK NIESR GDP Estimate (3M-Apr); Japanese Trade Balance (Mar) and Current Account Balance (Mar)
American employers posted the most open jobs in eight months in March, but total hiring slowed, sending mixed signals of the labour market. Job openings rose 2.7% to 5.76 million, the most since July, the Labor Department reported. That may suggest better hiring in the coming months. Yet hiring slowed to 5.3 million from 5.5 million. That indicates employers became more reluctant to fill open positions, due to slower economic growth from October through March. The decline in hiring echoes a pullback that was reported last week, when the official data showed net hiring slowed in April. Yet the increase in job openings suggests that job gains could pick up again in the coming months. Last week's non-farm payrolls report showed the world's biggest economy created the fewest number of jobs in seven months and Americans dropped out of the labour force, casting doubts on whether the Fed will hike interest rates before the end of the year. According to the Labor Department, non-farm payrolls rose by 160,000 jobs last month as construction employment barely climb and the retail sector shed jobs. That was the smallest gain since September and below the first-quarter average job growth of 200,000. Moreover, employers appeared to add 19,000 fewer jobs in February and March than previously estimated. While the unemployment remained unchanged at 5.0% it came at cost of people dropping out of the labour force. The share of Americans participating in the labour force dropped to 62.8% in April from 63.0% in March.
The UK's trade deficit widened in the first quarter to its biggest value since the onset of the financial crisis, reinforcing the view that global weakness is weighing on the economy. Britain's economic growth has already slowed to 0.4% in the first quarter. The deficit widened to 13.3 billion pounds, the most since the start of 2008, from 12.2 billion pounds in the fourth quarter of 2015, according to the Office for National Statistics. The UK trade shortfall widened over the quarter due to a 1.9 billion pounds increase in imports such as mechanical machinery, cars, clothing, jewellery and footwear. Meanwhile, exports rise by just 500 million pounds, driven by chemical products. Data from the ONS showed that Europe is gradually becoming a less important destination for British companies. In 2000, 60% of exports were destined for other EU countries, but the percentage dropped to 58% in 2005, 54% in 2010 and 47% in 2015. Over the same period, imports from the EU remained constant, making up for 54% in both 2000 and 2015. Still, the EU remains the biggest market for British exporters, which sell three times more to its member states than they do to the US. A British Chambers of Commerce survey found that six in 10 exporters favour staying in the EU.
Upcoming fundamentals: Economists foresee a minimal US oil inventory increase
After four consecutive weeks of big increases in terms of US oil reserves, this time investors are looking for only a slight rise of about 80,000 barrels for the period ended May 6. Inventory data release, due at 14:30 GMT is one of only two fundamental publications from the US on Wednesday. Another one will report on US public finances in April at 18:00 GMT.
Gold to set ground for prosperous rebound
Outlook for gold prices is remaining moderately bullish, as long as the spot is holding the most immediate support line represented by the 20-day SMA at 1,262.44. The weekly S1 at 1,269.32 should become a subject to a primary test over the next 24 hours, while a success here should pave the way for a surge up to the weekly pivot and monthly R1 at 1,286/87. The vast majority of daily and weekly technical signals continue betting on growth as well. However, any retreat below the closest support will shift attention down to the 1,250 area (monthly pivot, weekly S2 and 55-day SMA).Daily chart
The outlook seems to be less optimistic, based on the 1H chart. XAU/USD has been forming the channel down pattern since the first working day of May, while yesterday it finally consolidated under the 200-hour SMA (1,280.49). By falling also below the May 10 minimum at 1,256.72, gold will be exposed to a sharper dive down to the mid-April uptrend around 1,242.50.
Hourly chart
SWFX sentiment recovered to Monday levels
More than 64% of all OANDA transactions are now estimating the yellow metal will soar, up from about 60% 24 hours ago. SAXO Bank market participants are slightly less confident in ability of the bullion to appreciate; however, the longs are still ahead of the 50% mark at 56.79%.