- 52% of all SWFX open positions are short
- The yellow metal broke the previous channel down pattern
- Economic events to watch over the next 24 hours: US Labor Market Conditions Index (August)
Fewer jobs were created than expected in the United States last month, official data revealed on Friday. According to the Labor Department, total nonfarm payroll employment in the country jumped 151,000 in August, following July's upwardly revised gain of 275,000, whereas market analysts expected the economy to add 180,000 new jobs in the reported month. Over the past three months, job gains averaged 232,000, compared with 182,000 for the first eight months of 2016. Furthermore, average hourly earnings advanced 0.1%, down from July's 0.3%, while the average workweek dropped to 34.3 hours in the same month from July's 34.4, leading to a 0.2% decline in the index of aggregate weekly hours. Over the past month, job growth in construction and manufacturing was weak, while strong in retail, healthcare, leisure, and government sectors. The headline unemployment rate remained unchanged at 4.9%, whereas economic desks anticipated a slight deceleration to 4.8% during the reported period. Average hourly earnings held steady at 2.4% in the same month. On Wednesday, payroll processor ADP said US companies created 177,000 new jobs in August, slightly surpassing the 174,000 market forecast. The report put into question the possibility of an interest rate increase by the Federal Reserve at its September meeting.
US manufacturing activity fell in the red territory during August despite last month's positive reading. The Institute for Supply Management's Manufacturing PMI came in at 49.4 points in the eight month of the year, following July's 52.6 hike and falling behind the 52.0 market forecast. The manufacturing sector contracted for the first time in five months; however, the overall economy expanded for 87 consecutive months, the report from the ISM showed on Thursday. Other data released by the Labor Department showed that the number of Americans filing for unemployment benefits rose to 263,000 in the week ended August 27, compared to 261,000 claims registered in the previous seven days, while economic desks anticipated a steeper increase to 265,000 during the reported period. The four-week moving average of claims, considered a better measure of labor market trends, dropped 1,000 to 263,000. This marked 78 consecutive weeks of claims below the 300,000 level, the longest streak since 1973. In the meantime, continuing jobless claims increased 14,000 to 2.16 million in the week ending August 20. As the US economy approaches full employment, there is little scope for significant further declines in claims.
Upcoming fundamentals: US Labor Market Condition Index
It is Labor Day in the US, and due to that financial markets are closed in the United States. As it is a holiday for most, there is only one fundamental data release set to be published later in the day. The Labor Market Condition Index for August will be released at 14:00 GMT.
XAU/USD continues to surge on Monday
Daily chart: The yellow metal continues to surge on Monday morning, as it is trading just below the resistance cluster made up of the 20 and 55-day SMAs respectively at 1,327.29 and 1,331.33, and monthly PP at 1,326.43. At the moment, it seems unlikely that the metal will break past the resistance, and the bullion is more prone to change direction after reaching the monthly PP. Moreover the daily aggregate technical indicators forecast a fall for the metal by the end of the day's trading. In such case gold will most likely fall to the weekly PP at 1,319.05.Daily chart
Hourly chart: The hourly chart for the yellow metal shows some additional information about it, as it can be clearly seen that the metal was affected by the fundamental news, which came out during the middle of Friday. The bullion bounced with high volatility from 12:00 GMT to 14:00 GMT. During the volatile period gold moved between the levels of 1,303 and 1,330.
Hourly chart
SWFX trader sentiment unchanged on Monday
Meanwhile, OANDA Bank clients are largely bullish with respect to the bullion, precisely in 68.43%. In the meantime, SAXO bank clients are less bullish on the yellow metal, as 55.77% of positions are long.