- 51% of all SWFX open positions are short
- Gold had been falling for the past five trading sessions
- Economic events to watch over the next 24 hours: US Import Prices (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 Import Prices
The yellow metal will be affected during today's trading session by the strength of the US Dollar. There is only one notable data release, which will affect the Greenback on Wednesday, as the monthly change of the US Import Prices will be released at 12:30 GMT.
Gold finds support on Wednesday
Daily chart: The yellow metal found support in the first weekly support level at 1,315.33 on Wednesday morning, and afterwards the bullion slightly rebounded to trade around 1,320. Previously, on Tuesday the metal was squeezed in between the weekly and monthly pivot points respectively at 1,326.43 and 1,333.94, as gold awaited for fundamental data to make a move. That came with comments from various representatives from the Federal Reserve. The Fed might continue to impact the metal, however, from a technical viewpoint the metal has confirmed once more a trend line, which means that this the expected larger rebound.Daily chart
Hourly chart: The hourly chart for gold shows that the yellow metal gradually fell during yesterday's trading session until it reached the support cluster made up from long and short term pattern trend lines, the weekly S1 and the lower Bollinger band. The combined strength of the supports from 1,315.33 to 1,312.00 proved enough to change the metals direction.
Hourly chart
Traders expect a surge
Meanwhile, OANDA Bank clients are largely bullish with respect to the bullion, precisely in 70.18%. In the meantime, SAXO bank clients are also bullish on the yellow metal, as 63.91% of positions are long.