- 61% of all SWFX open positions are bearish
- Prices fluctuating around 1,280 level
- Gold started a new week lower than previous close
- Economic events to watch over the next 24 hours: Fed's Yellen Testifies
Wholesale sales rose less than anticipated for the fourth consecutive time on Monday, with data failing to meet the 0.5% forecast. The reading stood at 0.1%, meaning a C$54.8 billion, as reported by Statistics Canada. Consequently, the weak reading means that barely any growth occurred in May, as the figures declined for two months in a row prior to that. Among the sales sectors rebounds were detected in raw materials, such as ores, minerals, wood logs, precious and industrial metals. These materials contributed to the wholesale sales the most since August 2011. Elsewhere, food and beverages showed signs of growth, providing a decent boost to the wholesales sales reading. However, these gains were offset by drops in the sales of machinery and equipment, construction, mining and other activities. Furthermore, supplies and building materials also contributed to the weaker-than-expected growth, with their sales down 2%, making it a decline for the fourth month in a row. Nevertheless, the wholesale sales is the data required for the calculation of the upcoming Canadian GDP, which is due next week, while the retail sales data, also required, is coming up next this week. Despite a poor reading of the wholesale trade, the GDP is unlikely to post a slowdown.
According to the minutes released by RBA from its June meeting, the cash rate was maintained at record low 1.75 %, while measure of both short-term and long-term inflation remain below average. Following minutes, gave no indication that it would ease again in the nearest future. Meanwhile, low inflation and concerns about deflation forced RBA to announce an interest rate cut in May, in line with the release of the federal budget. Consumer prices, in turn, were below trend and are expected not to change, giving an additional support to the bank to keep the rate unchanged at 1.75% after May's 25-basis point cut. In the meantime, during the first quarter, the Australian economy had expanded 3.1%, showing the fastest growth in three and a half years. Low interest rates as well as weak Australian dollar were reinforcing the economy, thus pushing the unemployment rate down to 5.75% from 6.25% during the current year to the March quarter. Moreover, an overall advance in exports due to the higher resource production, also provided an additional support to the economy. Recent economic data proves that Australia is experiencing overall growth, despite a huge decline in business investment.
Upcoming fundamentals: FED's Janet Yellen testifies to the Senate
Main attention of gold traders on Tuesday are focused on the Federal Reserve Chairwoman's Janet Yellen's semi-annual testimony to the US Senate Banking Committee in Washington at 14:00 GMT. However, it has to be noted, that this testimony is considered no different, as any speech being given by Yellen at any time, as it gives traders insight into the possible movement of the Federal Reserve's plans for monetary policy.
Gold remains unchanged on Monday
Daily chart: Even as the bullion experienced high volatility on Monday by fluctuating between the levels of 1,277 to 1,292, the yellow metal ended the day's trading session only around 60 pips higher than it started it. However, on Tuesday morning gold prices are falling, as the price moved from 1,289.44 at the start of trading session to 1,285.15 by 5:15 GMT. The price is located between the monthly R1 at 1,278.62 and weekly PP at 1,295.15. In the meantime, aggregate technical indicators forecast a surge for the metal today.Daily chart
Hourly chart: The hourly chart shows, that the bullion has been bouncing between the various resistances and supports in the cluster around the level of 1,285 where the 20, 55, 100 and 200-hour SMAs have been moving close by to the price of the metal. However, gold also touched the monthly R1 at 1,278.62. At the moment, the commodity is set to meet with the 200-hour SMA at 1,282.03 and the lower Bollinger band at 1,280.80. If the metal moves north, then it will test the 20 and 55- hour simple moving averages.
Hourly chart
SWFX traders decrease bearish sentiment on Monday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 53.53%. However, SAXO bank clients have become bearish on the yellow metal, as 51.30% of positions are short.