- 53% of all SWFX open positions are short
- Prices fluctuate around the 1,340 level since August 4
- A huge fall was caused by US Non-Farm Payrolls data
- Economic events to watch over the next 24 hours: FOMC Minutes
US core consumer prices grew less than expected last month, official data showed on Tuesday. According to the Department of Labor, the core Consumer Price Index (CPI) rose 0.1% on a monthly seasonally adjusted basis in July, compared to the 0.2% hike seen in the previous month. Economic desks expected the core CPI to remain unchanged from June. On an annual basis, core inflation increased 2.2% in the reported month, while market analysts predicted the indicator to come in at 2.3% in July, unchanged from last month. Including food and energy, consumer prices dropped to 0.0% month-over-month in the seventh month of the year, down from the 0.2% upturn registered in June, but in line with analysts' expectations. Year-over-year, inflation added 0.8% last month, compared to the 1.0% increase seen in the first month of summer. The US CPI data along with the latest retail sales figures added to concerns about the health of the US economy, raising doubts as to whether the Federal Reserve will increase interest rates this year, as it formally adopted a 2% inflation target back in January 2012. Meanwhile, other data released on Tuesday showed that building permits fell 0.1% to 1.152 million units in July, after rising 1.5% to 1.153 million units in the preceding month, while markets pencilled in an increase of 0.5% to 1.159 million in the reported month.
Manufacturing activity in the Empire State region reflected contraction in the eight month of the year, official data showed on Monday. The Empire State Manufacturing Survey, the New York Federal Reserve's gauge of activity in the region, came in at -4.2 points in August, compared to the 0.6 hike seen in the previous month, whereas market analysts pencilled in an acceleration to 2.1 during the reported period. After entering positive territory for the first time after eight months in March, the survey's index swung between positive and negative. The survey drove the US Dollar lower against most of the major currencies as well as added to concerns about the state of the US economy, following last week's surpassingly weak economic data. Nevertheless, manufacturers expressed optimism about the US economy over the long-term. The reading is compiled from a survey of about 200 top manufacturing executives in New York State. The questionnaire seeks their opinion on the change in a number of business indicators from the previous month, and also the likely direction of these indicators six months into the future. A number below 0.0 points indicates contraction in the Empire State manufacturing region, while a number above indicates improving conditions.
Upcoming fundamentals: Federal Open Market Committee Minutes
The only notable information, considering the strength of the US Dollar, on Wednesday will be the release of the Federal Open Market Committee Minutes at 18:00 GMT. The minutes will shed some light on the Fed's thoughts on the central bank's rate and monetary policy in general.
Gold continues to trade near the 1,340 level
Daily chart: The yellow metal is trading near the weekly pivot point at 1,340.78 from the upside, as the metal was priced at 1,341.85 by 5:00 GMT on Wednesday. However, the bullion surged previously on Tuesday, as it jumped past the monthly pivot point at 1,345.31 and weekly R1 at 1,351.70 and reached the 1,357.99 level. As gold is once again stuck between the two levels, and taking into account other factors, it is clear that the commodity will surge at least back up to the monthly PP at 1,345.31 during today's trading session.Daily chart
Hourly chart: On the hourly chart for gold it can be seen that the yellow metal surged at the start of the Tuesday's trading session, as it broke through the resistance put up by the monthly PP at 1,345.31 at 5:00 GMT and surged, without slowing down, to 1,358.02 by 12:00 GMT. However, after that the bullion fell and almost touched the weekly PP at 1,340.78 by 13:00 GMT. Afterwards, the metal once again surged and even touched the monthly R1 1,351.70, as it bounced off it at 17:00. After reacting to the first monthly resistance gold fell back to the weekly PP by 5:00 GMT.
Hourly chart
Traders remain bearish on Wednesday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 62.06%. In the meantime, SAXO bank clients are less bullish on the yellow metal, as 59.68% of positions are long.