- 58% of all SWFX open positions are long
- 69% of pending commands were to buy the metal
- The bullion opened at 1,157.80 on Wednesday
- Upcoming Events: FOMC meeting minutes
Growth in the US economy's manufacturing sector improved more than expected last month, official figures revealed on Tuesday. The Institute of Supply Management reported its Purchasing Managers' Index advanced to 54.7 in December, surpassing analysts' expectations for 53.7 points. Back in November, the Index climbed to 53.2 from October's 51.9 points. This was the fastest pace of growth seen in five months. Any reading above the 50 point level indicates expansion in the manufacturing sector. Of the 18 manufacturing sectors, 11 reported growth last month, according to Bradley Holcomb, chair of the ISM Manufacturing Survey Business Committee. Other data released on the same day by the Department of Commerce showed that construction spending grew 0.9% to $1.18 trillion in November, the highest point since April 2006, compared to the previous month's upwardly revised gain of 0.6%. In the meantime, economists expected construction spending to rise just 0.5% in the reported month. The November reading together with the October upwardly revised figure could prompt analysts to revise up their overall US economic growth forecasts for the last quarter of 2016.
Americans became more optimistic about the economy in December since the postelection bump in confidence continues. As data suggest the US consumer confidence reached its highest in more than 15 years during the previous week as Americans expect more strength ahead in business conditions, stock prices and the job market following the election of Donald Trump as president in November. According to the Conference Board the Consumer Confidence Index advanced to 113.7 in December from an upwardly revised 109.4 in November. Meanwhile, the data topped estimates in a Reuters poll for a reading of 109.0. Another reason for the gain in confidence is surging optimism among older Americans. Economists follow confidence indicators because upbeat consumers are more likely to increase personal spending, which makes up most of the US economy.
Upcoming fundamental releases: FOMC meeting minutes
The single high impact data release – the FOMC meeting minutes - comes at 19:00 GMT and could put some pressures on the pair in case of a surprise
Bullion still bullish
Daily chart: Gold opened green on Wednesday, eyeing the weekly R1 at 1,165.12 with some more risk at 1,168.25, the upper trend-line of the ascending channel. We will look for the pattern to hold for around one and a half weeks, when it will have served its purpose and led XAU/USD to the upper trend-line of the senior channel down. Support lies at 1,153.74/31and could as well come into play today, in case the pair requires a more complete wave to the bottom boundary at 1,145.23. Signals at the support area will serve as an indicator on whether the down-wave is complete and short-term demand will go on to guide the pair north.Daily chart
Hourly chart: The hourly chart shows that even though Gold shows decent northward momentum, highs are losing amplitude while lows stay the same, sketching a rising wedge pattern which implies that a downward breakout should follow. The pair is currently approaching the upper Bollinger Band to the upside with demand at 1,159.32, the 20-hour SMA. More prominent support rests at 1,154.35/22, where a cluster of indicators could steal some momentum.
Hourly chart
SWFX traders still optimistic
OANDA Gold traders remain largely optimistic regarding the Bullion, as open positions were 84.22% long. Meanwhile, traders of SAXO bank have stayed roughly the same in terms of prospects for the metal, as today showed 64.18% of traders betting the metal will surge, compared to 64.83% during the previous session.