- Only 52% of all SWFX positions are short
- Traders are looking for Fed Janet Yellen's speech as Friday's main fundamental event to influence markets
- Daily and weekly technical indicators maintain mixed views on gold
- Economic events to watch over the next 24 hours: Spanish Retail Sales (Apr); Swedish Retail Sales (Apr); US Prelim GDP (Q1), Consumer Confidence Index (May); Fed Chair Yellen Speaks
British economic growth lost steam in the first quarter on the background of unexpected contraction in business investment. The second reading of Britain's first-quarter GDP figures confirmed the loss of momentum in the economic recovery. The Office of National Statistics announced that the economy grew 0.4% in the first quarter, slower than the 0.6% pace in the last three months of 2015, the same as the first estimate given in April. From a year earlier GDP expanded 2%, which was revised down from last month's first reading of 2.1%, the ONS said. Moreover, business investment missed with a fall of 0.5% against 3.2% expected. Also the BBA's mortgage approvals did not meet expectations by sliding to 40.1K against 44.8K predicted. In addition, a separate report showed that out of the four main components on the output side of GDP, production and construction contracted from the previous quarter, while agriculture and services activity increased, according to a breakdown of the first quarter's reading. Production shrank 0.4% and construction fell by 1%, the ONS said. Manufacturing, the largest component within production, dropped 0.4%. Services, which account for a massive 79% of GDP, increased 0.6%, posting a 13th consecutive quarter of growth. The expansion was less than the fourth quarter's 0.8% pace.
The US crude inventories dropped last week, posting the biggest weekly decline in seven weeks, due to the falling import, which forced refiners to cut output. According to the Energy Information Administration, the report showed a 4.2 million-barrel plunge in crude supplies last week, which was a sharper decrease than the 2.5-million fall based on analysts' expectations. The report also showed a surprising rebound in supplies from Canada, as weekly imports reached 3.09 million bpd, from the previous week's 2.59 million bpd, despite Canadian oil sands shutdowns amid a massive wildfire. A series of outages around the world, such as wildfires in Canada and a spate of violence in Nigeria, the oil-producing region, has helped cut global oil supply by nearly 4 million barrels per day this month. This data suggested a bullish sign for oil prices and the US crude oil went up to its highest level in seven months. As a result, the US crude futures hit a high of $49.62 a barrel while Brent crude, in turn, was 65 cents higher at $49.26 after touching $49.69 after the report. Moreover, crude has almost doubled from 12-year lows seen in January on the belief that the market will start to rebalance as supplies of high-cost oil decline and rising consumption by motorists and other oil users reduces a global surplus.
Upcoming fundamentals: Fed's Yellen to speak today
The most vital economic event of today is the speech by the Federal Reserve Chair Janet Yellen. She will receive an award from Harvard University and will talk to the university professor Gregory Mankiw at 17:15 GMT. Even though this speech does not have a predefined topic, the markets will be closely watching any signals of the central bank's next move. Janet Yellen's speeches are considered important, provided that she usually speaks for the whole FOMC committee and does not express her own personal view. Turbulence of the markets is expected to grow by the end of the day.
Gold prolongs the slump to eight days
Daily chart: Current eight-day long losing streak of gold prices is the longest one since early November. The bulls have worked hard to revive on Thursday. They managed to send XAU/USD to the 1,234 level, but after facing the weekly S1 there the bullion crashed again the close the daily session as low as 1,219. On Friday morning we are observing more weakness, with the 1,212 marker tested shortly. If the 100-day SMA together with the weekly S2 (1,216.01/47) are out of power to provide sufficient demand on Friday, then we are highly likely to continue seeing gold's drop in the direction of the March low at 1,207.87.Daily chart
Hourly chart: The risk of the March low being probed as soon as May 27 is relatively uplifted. The metal bounced of the channel down pattern's upper edge yesterday to show that the bears are still capable of dominating in the market. On the other hand, the current key resistance is the 1,225 level, a breach of which would allow for a rebound towards the 200-hour SMA at 1,248.31. However, the latter scenario is not bounded by the next 24 hours of trading and, if happens, will need more time to be accomplished.
Hourly chart
Bullish market portion stabilizes at 48%
Meanwhile, OANDA and SAXO Bank clients are overwhelmingly positive with respect to gold, precisely in 67.88% and 63.36% of all cases in the morning on May 27.