- 53% of all SWFX open positions are short
- Gold has formed an ascending channel 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 PMI and ISM indices
In the second part of the day, markets will be affected by information being published in the US, as at 13:45 GMT the US PMI Services index for August will be out. Afterwards, the US ISM Non-Manufacturing Composite index for August will be published at 14:00 GMT.
Gold struggles on Tuesday
Daily chart: The yellow metal continues to struggle with the monthly PP at 1,326.43 for the third consecutive session on Tuesday, as the commodity price keep reaching above it and retreating afterwards. However, the rate already managed to have a close above the resistance on Monday, as the session ended at 1,326.83, and a surge would be consistent with the channel upward pattern, which the metal has formed in the past four trading sessions. Although, daily aggregate technical indicators do not support a surge of the bullion during today's session.Daily chart
Hourly chart: The hourly chart for gold revels more details. As it turns out by looking at the hourly chart, the metal is squeezed in around the monthly PP by the 20-day simple moving average and the Bollinger bands. Trading volatility of the bullion has decreased to such extent, that the before mentioned resistances and supports are providing a stalling effect. However, it means also that a breakout is soon to occur, and due to the fact that the 20-hour SMA with the Bollinger bands are aimed upward the breakout is most likely to happen to the upside.
Hourly chart
SWFX traders remain bearish on the metal
Meanwhile, OANDA Bank clients are largely bullish with respect to the bullion, precisely in 65.12%. In the meantime, SAXO bank clients are less bullish on the yellow metal, as 53.40% of positions are long.