- 58% of all SWFX open positions are bearish
- Prices fluctuating around 1,330 level on Thursday morning
- Gold fell on the clarity brought on by the new UK's prime minister
- Economic events to watch over the next 24 hours: BoE Minutes (Jul 14); US Initial Jobless Claims (July 9); US PPI (June); Fed's Bullar Speaks; FOMC's George Speaks; Fed's Lockhart Speaks; Fed's Kaplan Speaks
According to the Mark Carney, criticism towards the Bank of England in the run-up to the EU referendum had been "extraordinary in all senses of the word". For the first time in more than seven years, economists are finally expecting some action from the Bank of England towards the UK interest rates during its first meeting after the Brexit referendum on Thursday. It is expected, that in order to calm financial markets and spur confidence after the Britons voted to leave the European Union, the central bank is widely seen to reduce its key interest rate to 0.25% from a current record low of 0.5%, where it has stood since March 2009. Currently, the BOE, is trying to find a balance of addressing the potential economic impact of a Brexit, without seen as siding with either political position. Philip Shaw, chief economist at Investec adds "Carney alluded to a range of available policy options, some of which were not used previously. We are at pains to identify exactly what the Governor might have in mind here. Dropping cash from helicopters (or a practical equivalent), has been ruled out by several central banks and we do not see this as a realistic possibility". Meanwhile, the BOE rate decision and minutes are going to be announced on Thursday
The U.S. labour market continued to slow in June but at a more moderate pace as the economy moved closer to full employment, according to an index prepared by the Federal Reserve. The US labour market conditions index registered a 1.9 decline for June from after a revised drop of 3.6 the previous month. This was the sixth successive decline and also a slightly larger than expected decline for the month, maintaining the generally disappointing trend seen for 2016 as a whole. The data could suggest an imminent turning point, but further evidence will be needed to convince markets of a sustained improvement despite the bumper payrolls release last Friday. The LMCI is a broad composite index of 19 labour-market indicators and it watched closely by the Federal Reserve with Chair Janet Yellen instrumental in setting up the index. The Fed introduced the index in 2014 as a way to measure the labour market's momentum. Moreover, Fed officials have touted the LMCI as a more comprehensive view of the labour market than the one provided by individual data releases from the Department of Labour and other agencies.
Upcoming fundamentals: US data and Fed speakers
Today most market participants have to concentrate on the events concerning the UK economy, as Bank of England minutes are set to be released at 11:00 GMT. On the other hand Thursday data and hints affecting gold mostly will come from the land of the opportunities, the United States. First of all at 12:30 GMT the US Initial Jobless Claims and the US PPI data will be published. The PPI will be monthly and yearly and also excluding or including food and energy. Afterwards at 14:00 GMT Fed's Bullard is set to give speech at the meeting of the Official Monetary and Financial Institutions Forum to discuss monetary policy and the role of the U.S. in the global economy, in St. Louis. However it will not be his only speech today, as he is also set to speak at 22:40 GMT on the same topic. In addition, George and Lockhart will give speeches at 15:15 GMT and Kaplan will express himself at 23:00 GMT.
Gold regains losses on Wednesday
Daily chart: After falling on Tuesday, the yellow metal rebounded on Wednesday, as, after reaching the weekly low level of 1,331.66, the metal surged to 1,342.44, where it met with resistance put up by the weekly S1 exactly at that point. On Thursday morning, the commodity has bounced off the weekly S1, and it has dropped to 1,337.20 level by 5:00 GMT. From the lower side, the metal faces the 20-day SMA at 1,325.53 and the weekly S2 at 1,319.10. In the meantime, daily aggregate technical indicators forecast a surge for gold today.Daily chart
Hourly chart: The hourly chart for gold shows nothing but a steady surge for whole Wednesday. The yellow metal was only hindered partly by the resistance put up by the weekly S1, and the metal broke it on the second attempt at 16:00. However, at midnight the commodity hit the upper Bollinger band at 1,346.98 and began a decline below the 20 and 55-hour SMAs and the weekly S1 until the level of 1,336.90 by 5:45 GMT.
Hourly chart
SWFX traders bearish on Wednesday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 59.59%. In the meantime, SAXO bank clients are more bullish on the yellow metal, as 61.92% of positions are long.