Gold's surge continues on Thursday

Source: Dukascopy Bank SA
  • 58% of all SWFX open positions are bearish
  • Prices fluctuating around 1,370 level on Thursday morning
  • Gold surged on release of the UK Referendum results and following uncertainty
  • Economic events to watch over the next 24 hours: US ADP Employment Change (June); US Initial Jobless Claims (July 2); DOE Crude-Oil Inventories (Jul 1)
As EU lawmakers met in the EU Economic Summit called together to deal with the UK issue and assumed a strict position on the matter, it did not stop the yellow metal's surge. Because of that, even gold initially dropped slightly for one session after the Brexit, the bullion steadily surged for the past six trading sessions. That is due to the fact that uncertainty still prevailed in the few previous sessions, as the political intrigues in the UK for the prime ministers seat are becoming more evident. In addition, most recently the Bank of England President's comments and the BoE's Financial Stability Report has affected the situation.

Good news from the American side, the services sector activity advanced during the previous month from lows where it had been settling during more than two years. Moreover, data managed to beat significantly consensus expectations. The ISM NonManufacturing PMI soared to 56.5 points, showing steep growth rather than mediocre growth. It is important to mention, that the May reading had been the weakest release since February 2014, while June's number, in turn, was the highest since October 2015. Although, the employment component rose from 49.7 to 52.7 points, which is a good sign for the jobs report. The following rebound could imply a jump in jobs, which is highly desirable after May's terrible report. In the meantime, the final June US PMI services-sector data slipped to 51.4 from the flash 51.3, however, markets were expecting a slightly bigger upward revision. The composite index was confirmed at 51.2 from 50.9 previously. Overall strong doubts surrounding the economic performance will continue to persist, especially, taking into account weak business confidence, despite the ISM data, which was notably more encouraging with a significant monthly improvement in June.

The new orders for US manufactured goods declined 1.0% in May following a revised 1.8% advance during the previous month, being a slightly steeper decrease than the 0.8% consensus forecast. Moreover, there was a 1.9% drop on a yearly basis in total orders, while excluding transport there was a 3.4% annual loose. Meanwhile, there are some hints of a gradual expansion in conditions, but not enough to trigger a significant shift in sentiment towards the economy. Meanwhile, there was a recovery in energysector orders after the very steep drop occurred during the previous month, although total durable goods orders still went down 2.3% following a 3.2% gain the previous month. Although, there was a 1.6% annual rise in durable goods orders. Demand for mining and energy-related equipment slipped 5.8% after a 20.8% plunge in the prior month. Overall, the data suggests stabilisation in the industrial sector with an advance in unfilled orders and lower inventories likely to support production during the next few months. Nevertheless, the rate of improvement still is relatively limited.

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Upcoming fundamentals: US employment and crude oil inventories

On Thursday gold prices will be affected by the fluctuations in the US Dollar and oil prices, as investors might flock even more to the safety of gold on hearing bad news. US ADP Employment Change for June is set to be released at 12:15 GMT. It will be shortly followed by the weekly US Initial Jobless Claims at 12:30 GMT, which shook the US Dollar strength at the start of June. Later in the day, DOE Crude-Oil Inventories data for the previous week will be published at 14:30 GMT.



Gold continues to surge on Thursday

Daily chart: The yellow metal marked its sixth consecutive session of gains on Wednesday, as after a highly volatile trading session, the metal ended day's trading at 1,363.35. On Thursday the bullion continued its surge, and it was trading at 1,367.70 by 5:15 GMT. At the moment, the metal has been testing the weekly R2 at 1,369.17 since yesterday, and, if the newly established upward trend continues, it is set to break past this resistance. In the meantime, daily aggregate technical indicators also indicate on a surge of gold today.

Daily chart
© Dukascopy Bank SA

Hourly chart: The hourly chart shows that the bullion broke the second weekly resistance at 1,369.17 at 9:00 GMT on Wednesday, and the metal stayed above the resistance for seven hours, when it dropped back below the weekly R2. At the moment, the yellow metal has surged back to the resistance level, and it is trying to break through it.

Hourly chart
© Dukascopy Bank SA


Trader sentiment unchanged on Thursday

SWFX traders have not changed their positions for three days now, as on Thursday 58% of open positions were short. However, pending orders in the 100-pip range are still long, as 61% of orders are long.

Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 59.43%. In the meantime, SAXO bank clients are less bullish on the yellow metal, as 53.14% of positions are long.

Spreads (avg,pip) / Trading volume / Volatility


Market participants foresee the price of gold at 1,350 by the end of September

Traders who were asked regarding their longer-term views on gold between June 7 and July 7 expect, on average, to see the metal around 1,350 by the end of September. Generally, 67% (+2%) of participants believe the price will be generally above 1,300 in ninety days. Alongside, 25% of those surveyed reckon the price will trade in the range between 1,150 and 1,300 over the next three months

© Dukascopy Bank SA

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