- 51% of all SWFX open positions are short
- Gold had been falling for the past four trading sessions
- Economic events to watch over the next 24 hours: US Monthly Budget Statement (August);
On Thursday September 8, the European Central Bank decided to leave interest rates in the single currency area unchanged, but being open for more cuts in the upcoming months and renewed calls to politicians to apply more stimulus for the economic recovery. As a result, the ECB held the single currency area's main interest rate at zero. Also, the European Central Bank left its 1.7 trillion euro stimulus programme unchanged, brushing off concerns over economic shock waves from Britain's decision to leave the European Union. However, the ECB president Mario Draghi noted that uncertainty over the Brexit was among the factors dampening the Euro zone's growth and he unveiled a slightly weaker economic outlook for the bloc. Although, the ECB did not even discuss extending its 80 billion (per month) asset purchase programme, as president Mario Draghi noted "not so substantial to warrant a decision to act". The ECB President Mario Draghi also stayed that he is concerned over persistently low Euro zone inflation, which has fallen short of the ECB's near-2% target for more than three years. According to the fresh ECB staff forecasts, inflation rising very gradually, to 1.2% next year and 1.6% in 2018.
The number of Americans filing for unemployment benefits dropped unexpectedly last week, official data revealed on Thursday. According to the Labor Department, initial jobless claims fell 4,000 to a seasonally adjusted 259,000 in the week ended September 3, touching the lowest level since mid-July and following the preceding week's reading of 263,000. Market analysts anticipated a slight increase to 264,000 filings in the reported period. Last week's numbers market the 79th consecutive week of initial jobless claims remaining below the 300,000 level, the longest streak since 1973. There were no special factors influencing last week's claims data; however, jobless claims for Virginia, New Mexico, Alabama, Minnesota, Hawaii and Puerto Rico were estimated amid the Labor Day celebrated on Monday. Furthermore, the four-week moving average of initial jobless claims, considered a better measure of labor market trends, declined 1,750 to 261,250 during the same week. Meanwhile, the number of continuing jobless claims dropped 7,000 to 2.14 million in the week ending August 27, whereas the four-week moving average of continuing claims decreased 4,000 to 2.15 million. The claims data together with the latest JOLTS report suggest that the trend in employment growth remains strong.
Upcoming fundamentals: US Monthly Budget Statement
As the Fed speakers spoke on Monday, it did not manage to move the yellow metal in either direction. The same is expected from the release of the US Monthly Budget Statement for August, as it is forecasted to be negative. The monthly budget will be published at 18:00 GMT.
Gold remains squeezed in
Daily chart: On early Tuesday morning, the bullion had almost touched the weekly PP at 1,333.94. However, the yellow metal remains squeezed in between a strong support level represented by the monthly PP at 1,326.43 and a resistance cluster from the upside made up from the 20 and 100-day SMAs respectively at 1,330.49 and 1,336.33 and the weekly PP 1,333.94. Due to this fact and the daily aggregate technical indicators, which forecast no changes in the metal's price during today, it is most likely that the metal will continue fluctuating between these levels until some fundamentals set a direction for the bullion.Daily chart
Hourly chart: On the hourly chart for gold it can be seen that the metal moved together with the 200-hour SMA just above the monthly PP until the rate was pushed down by the 20-day SMA at 7:00 GMT on Monday. Afterwards, the rate fell until it was pressured back up by the lower Bollinger band around 17:00 GMT. In general, the chart shows that the yellow metal is being bounced up and down between the weekly and monthly PPs by various SMAs.
Hourly chart
Traders expect a surge
Meanwhile, OANDA Bank clients are largely bullish with respect to the bullion, precisely in 69.77%. In the meantime, SAXO bank clients are also bullish on the yellow metal, as 62.50% of positions are long.