- 55% of all SWFX open positions are bearish
- Prices fluctuating around 1,360 level on Friday morning
- Gold surged on release of the UK Referendum results and following uncertainty
- Economic events to watch over the next 24 hours: US Change in Nonfarm Payrolls (June); US Unemployment Rate (June); Baker Hughes US Rig Count (July 8)
The number of Americans filing unemployment benefits unexpectedly plunged last week, to the lowest level since April, giving a hint that labour market started to recover amid a shaky global economy. According to the Labor Department, initial claims for state unemployment benefits lost 16,000 to a seasonally adjusted 254,000 for the week ended July 2. Moreover, following drop left claims close to a 43-year low of 248,000 touched in midApril. Economists, in turn, had expected jobless claims to reach 270,000 from the 268,000 originally reported for the June. Meanwhile, today, on Friday, the highly anticipated June employment report will show whether job creation remains sluggish or is starting to recover. In the meantime, according to the Energy Information Agency, the US commercial crude stockpiles declined by 2.2 million barrels to a total of 524.4 million in the week through July 1. Oil futures diminished by nearly 5%, on this news, settling their lowest level in two months. Oil remains vulnerable to further price declines mainly due to the UK's plan to leave the European Union, as well as due to the stronger dollar.
UK manufacturing and industrial production data came in ahead of expectations for May, with both figures a big beat on the forecasts of economists. Manufacturing production decreased 0.5% on a monthly basis in May, down from April when it rebounded 2.3%, while the indicator came in at 1.7% on a yearly basis in the same month. Both readings beat the estimates of -1.2% and 0.6%, respectively. Overall industrial output fell 0.5% on a monthly basis in May, after a revised rebound of 2.1% seen in April. The reading did, however, beat the forecast of a negative 1.0%. On an annual basis, the gauge rebounded 1.4% in the fifth month of the year, while markets had bet on a 0.5% advance in the reported month. Industrial and manufacturing production show the volume of production in the UK's industrial and manufacturing sector, and the indicators have been volatile since the beginning of the year. The data might look good, but, in general, both of them fell from a strong base in April, and that is before accounting for the potential crash as a result of the UK's vote to leave the European Union in June. Moreover, analysts expect the Brexit vote to have a profound influence on the country's economic performance not only in the months following the vote, but also in the years ahead.
Upcoming fundamentals: US employment and crude oil rig count
Gold on Friday will be affected by movements of the US Dollar and the newest data on active US crude oil rig count. First will be released the US employment indicators, as Change in Nonfarm Payrolls and US Unemployment Rate will be both published at 12:30 GMT. Later in the day the yellow metal might see some pressure from the crude oil price fluctuations, as this week's Baker Hughes US Rig Count Crude Oil number will be released at 17:00 GMT.
Gold stops the surge on Thursday
Daily chart: The yellow metal stopped its six consecutive trading session surge on Thursday, as the metal dropped from 1,363.66 at the start of Thursday's trading session to 1,360.94 at the end of day's trading. In addition, the bullion continues to drop on Friday, as it opened today's session at 1,359.40, and was trading at 1,357.70 by 5:00 GMT. In the meantime, aggregate technical indicators forecast a surge for the metal today and no changes for the next week.Daily chart
Hourly chart: The hourly chart shows that the bullion moved to the second weekly resistance at 1,369.17 and bounced off it. The yellow metal plummeted until 14:00 GMT to 1,353.83, and the metal scored its biggest losses at 13:00 GMT. However, gold rebounded for the next two hours, and it has since remained almost stable at 1,357.26.
Hourly chart
Bullish sentiment decreased on Friday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 59.53%. In the meantime, SAXO bank clients are less bullish on the yellow metal, as 54.65% of positions are long.