- 53% of all SWFX open positions are bearish
- Prices fluctuate around the 1,280 level
- Gold touched the 1,275 level on Friday
- Economic events to watch over the next 24 hours: Japanese Industrial Production (April); NAB Business Conditions (May)
A survey indicates that consumers became more concerned about the US economy. Their rating of government economic policy suddenly dropped to the weakest level in almost two years. The recent data shows the growing gap between the most favourable assessments of Current Economic Conditions since July 2005, as well as renewed downward trend of the Expectations Index, which fell by a rather modest 8.6% from the January 2015 peak. Also, the University of Michigan's preliminary consumer sentiment index managed to advance, and was higher than expectation for the current month, but still went down compared to the preceding month's level. The index was 94.3, outperforming the estimates for 94, but still down from 94.7 mark. Moreover, consumers hint that they might increase their savings and delay spending if the pace of job creation does not accelerates. Also, they supposes that inflation will have a minimal impact on their real incomes since long-run inflation expectations plunged 0.2 percentage points to 2.3%, to its record low. In the meantime, consumers do not think the economy is as strong as it was last year period as well as do not anticipate the economy will show the same financial health in the year ahead as they anticipated a year ago.
Although there were growing concerns over the strength of the Canadian economy, mostly amid rather weak expectation results of April's data, the latest employment change figures surprised with their positive readings. As a result, these concerns should ease, as stronger employment data should diminish Bank of Canada's willingness to cut interest rates. A total of 13,800 new jobs were added in May, after having unexpectedly fallen to -2,100 in April, as reported by the Statistics Canada. According to expectations, the employment change was likely to rise only up to 1,800 during the previous month, but the upbeat data definitely brings more brightness in the overall Canadian economic activity. Meanwhile, the strong jobs figures also sparked a decline in the unemployment rate, as it dropped to an almost one-year low in May, namely from 7.1% to 6.9%. Consequently, the so-called Loonie grew stronger with the release of the data, having risen up to 1.276 against the US Dollar. Meanwhile, being at 6.9%, the Canadian unemployment rate demonstrates the lowest figure since July 2015. The decline was influenced by a drop in the participation rate which slipped slightly to 65.7 from 65.8, but was mostly drive by strong growth in fulltime employment.
Upcoming fundamentals: Minor data from Japan and Australia
Today there are no major news for gold and other commodities. However, during the night, the Japanese and Australians are about to release some data. Before the Japanese, the National Australia Bank is set to release its Business Conditions index at 1:30 GMT. If the index will turn out to be positive, it will indicate at the increase of the Australian business and with it commodities exports. On the other hand, the Japanese Ministry of Economy, Trade and Industry is set to release the industrial production monthly changes at 4:30 GMT. This data could affect the commodities markets, as the Japanese import metals and other commodities from Australia and other countries.
Gold increases gains to 1,280 on Monday
Daily chart: The bullion continued its surge on Friday, as the yellow metal gained strength and the price changed from 1,268.61 to 1,272.83. In addition, as the markets opened on Monday, the metal started trading at 1,275.53. At the moment, gold has passed the resistance provided by monthly R1 at 1,278.63, with which it struggled as it bounced off it On Friday and on Monday morning. If the metal changes direction, it will fall to at least the level of 1,261.90, where the weekly PP is located.Daily chart
Hourly chart: The hourly chart shows that the bullion has been volatile, but is steadily moving upward. At the moment the yellow metal has surged to the level of 1,282. However, after a spike at 5:00 GMT the metal continues being volatile. Gold is located between the first and second daily resistances, which are located respectively at 1,279.12 and 1,285.39. As this commodity continues its surge, it will face the monthly R1 at 1,289.03 in the near future this week. Aggregate technical indicators forecast no changes for the metal today and no changes on a weekly time frame.
Hourly chart
SWFX traders do not shift their positions on Monday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 58.30%. However, SAXO bank clients have become bearish for the first time in weeks, as 50.60% of all open positions are short.