- 55% of all SWFX open positions are short, as the sentiment became bearish on Monday
- Prices fell to the 1,350 level on Thursday morning
- Gold moved lower after reaching the 1,365 level
- Economic events to watch over the next 24 hours: BoE Rate (August 4); US Initial Jobless Claims (July 30)
Activity in Britain's services sector dropped to its lowest level since March 2009 following the country's decision to leave the European Union, fresh data from HIS/Markit revealed on Wednesday. The final Purchasing Managers' Index (PMI) for the services sector fell to 47.4 on a seasonally adjusted basis in July from 52.3 points seen in the preceding month, in line with market analysts' expectations and the preliminary reading released by Markit/CIPS two weeks ago. Furthermore, the all-sector PMI, which includes the manufacturing sector as well as the construction sector and the services sector declined to 47.3 points in the reported month, following June's 51.9 points and hitting the lowest level since April 2009. Although Chris Williamson, chief economist at Markit, commented in the report it is too early to say if the indicators will remain in the contraction territory in the upcoming months, adding that the fall of the all sector PMI showed an increased chance of the United Kingdom sliding into recession. Moreover, the PMI surveys added pressure on the Bank of England to cut interest rates and its economic growth forecasts for the domestic economy at its August meeting on Thursday for the first time since the financial crisis.
US private companies added more jobs than expected in July, the ADP report revealed on Wednesday. Private sector firms in the United States created 179,000 new job places in the reported month, slightly up from the previous month's upwardly revised reading of 176,000, whereas economic desks anticipated a meagre decrease to 170,000 in the seventh month of the year. Business services contributed 59,000 new jobs in July, whereas financial services firm added 11,000 new jobs in the same month. Furthermore, the trade, transportation, and utilities industry added 29,000 new employees to the US labour market, while manufacturers created 4,000 new jobs in July. In the meantime, the construction sector subtracted 6,000 jobs in the reported month. Other data released on Tuesday showed that activity in the US nonmanufacturing sector dropped in July, as the ISM Non-Manufacturing Index fell 55.5 points, after rising to 56.5 in June, its 8-month high. Market analysts expected the indicator to come in at 56.1 in July. The EIA weekly report revealed that US crude oil inventories by 1.4 million barrels in the week ended July 29, after rising by 1.7 million barrels in the previous seven days. Analysts pencilled in a drop of 1. Million barrels in the reported period.
Upcoming fundamentals: US Initial Jobless Claims and BOE rate
There is only one fundamental data release, which will affect the yellow metal on Thursday from the US, as its movement might be changed by data affecting the US Dollar. The US Initial Jobless Claims will be released at 12:30 GMT, and they are expected to be at 266,000. However, the post Brexit turmoil continues to plague the financial markets and drive market participants to safe currencies and gold. Most analysts expect that during today's Bank of England's meeting the BoE rate will be decreased to 0.25% from 0.5%.
Gold falls to 1,350
Daily chart: The yellow metal bounced off the first weekly resistance at 1,366.06 and fell to 1,357.25 on Wednesday. At the start of Thursday's trading session the bullion has fallen even more than during yesterday's session, as the metal had fallen to 1,350 by 5:00 GMT. At such rate gold is soon going to reach the support provided by the monthly PP at 1,345.31. However, daily aggregate technical indicators forecast a surge for the metal during today's trading session.Daily chart
Hourly chart: The hourly chart shows that the yellow metal in the past 24 hours has been falling by taking downward steps with approximately 12 hour interval. Gold was trading flat around 1,363 until 12:00 GMT, when it took its first downward move, as the metal fell to 1,357 by 15:00 GMT. Afterwards, the bullion fluctuated at that level until 2:00 GMT, when it fell once again to 1,352, and it has been fluctuating at that level since then by 5:45 GMT.
Hourly chart
SWFX bearish stance unchanged on Thursday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 58.47%. In the meantime, SAXO bank clients are less bullish on the yellow metal, as 56.78% of positions are long.