- 50% of all SWFX open positions are bearish
- Prices reached and stayed at 1,241 level
- Bullion has regained its losses and is at May 24 levels (1,241)
- Economic events to watch over the next 24 hours: Fed's Rosengren speech; US Labor Market Conditions Index; Fed Chair Janet Yellen speech.
The last Friday's US economy release proved to be unexpectedly disappointing since the employment picture showed the weakest payroll gains for at least six years. According to the data, the nonfarm payrolls advanced by a seasonally adjusted 38,000 for the previous month, strongly below a revised of 123,000 figure registered for April as well as strongly below expectations for an acceleration of about 160,000. Overall, employers employed 59,000 fewer workers in March and April than previously reported. Majority of economists agreed that following Friday's disappointing US employment report could eliminate the chance that Fed officials would tighten policy during their meeting on June 14-15 in Washington as well as may make it difficult raise the rate in July. The report, which was also released in the same day by the Labor Department is unemployment rate which went down to 4.7%. Meanwhile, following rate does not include those who did not actively look for employment or the underemployed who were working part time for economic reasons. The following data demonstrates the harshest drop in almost nine years since people abandon the labour force. Overall, the steep decline in the labour force during the last couple months of course defies hopes that disenfranchised workers are going to return to the jobs market.
Canada ran a near-record trade deficit in April as the economy continued to struggle with weak crude oil prices that have slashed the value of exports and curbed growth. The deficit, announced by Statistics Canada, was the 20th in a row—$2.9 billion compared with March's revised deficit of $3.2 billion. Data was greater than the $2.5 billion shortfall forecast by analysts. The shortfall narrowed from the previous month as exports rose 1.5% from March on a slight recovery in oil prices and increased natural gas shipments to the United States. Volumes rose by 0.5% while prices grew by 1.1%. Meanwhile, a separate report by Statistics Canada showed that labour productivity rose in the first quarter at its fastest pace in over a year. The labour productivity of Canadian businesses grew by 0.4% in the first quarter of 2016 after recording no growth in the fourth quarter of 2015. Moreover, the increase matched the forecast by market analysts. In addition, data showed that real gross domestic product of businesses grew by 0.6% in the first quarter after a flat fourth quarter, in part because output of goods-producing businesses resumed growth after a decline in the fourth quarter. The number of hours worked increased by 0.2% after remaining virtually unchanged the previous quarter. Overall labour costs per unit of production dropped by 0.3% as productivity growth outstripped the increase in wages.
Upcoming fundamentals: US labor data and Fed speakers
With the bullion taken into account, there are very few notable events today. First is the speech Fed's Rosengren is presenting at 6:15 GMT. Next will be the US Labor Market Conditions Index, which will be published at 14:00 GMT. Last but most important will be the Federal Reserve's Chairwoman's Janet Yellen's speech at 16:30 GMT to the World Affairs Council of Philadelphia. It is clear that the Rosengren speech will hint at more information about the Fed's rate hike possibility, but Yellen's speech will give a lot more insight into future activities of the Federal Reserve.
Gold erodes two-day gains on Thursday
Daily chart: The Yellow metal bounced back to the level of May 23, as the Greenback lost its strength against all other currencies and commodities. Main reason for the surge were the US Non-Farm Payrolls, which were published as an increase of 38,000 and fell short the forecasted 160,000. With it the bullion gained 2.7% from 1,210.35 to 1,243.85. However, at the moment it is trading at 1,242.17 which is just below the 55-day simple moving average at 1.244.12 and below the monthly PP at 1,239.18. Further gains for the gold are unlikely, as the price correction has already ended and the metal is slowly continuing its previous course.Daily chart
Hourly chart: In the meantime, the hourly chart shows the this week's fall of the bullion in more detail, as it shows that the metal reached the height of 1,248.63, but has now decreased to 1,241.87 and remains stable. However, the yellow metal is trading above both weekly and daily pivot points at around 1,230, which indicates at a bullish trend in general for today and this week.
Hourly chart
SWFX market sentiment becomes neutral on gold
Meanwhile, OANDA and SAXO Bank clients are still more positive than SWFX traders with respect to the bullion, precisely in 68.5% and 56.20% of all cases, correspondingly, in the Monday morning on June 6.