- 56% of all SWFX open positions are short
- Gold surged gradually during Tuesday's trading session
- Economic events to watch over the next 24 hours: US Initial Jobless Claims
The US service sector expanded at the slowest pace in more than six years, official data revealed on Tuesday. The Institute for Supply Management said that its Non-Manufacturing PMI dropped to 51.4 points in August from the preceding month's 55.5, whereas market analysts anticipated a slight decrease to 55.4 in the reported month. Last month's reading was the weakest since February 2010. Nevertheless, readings above 50 points indicate an expansion in the services sector, and the US service sector grew for 79 consecutive months. Furthermore, the Non-Manufacturing Business Activity Index fell to 51.8, compared to July's reading of 59.3, showing growth for 85 straight months. The New Orders Index declined to 51.4, following the previous month's 60.3. The Employment Index decreased to 50.7 percent from the July reading of 51.4. The Prices Index came in at 51.8 in August, down from the preceding month's reading of 51.9, reflecting growth for the fifth consecutive month. According to the ISM, 11 out of 18 non-manufacturing sectors reported growth last month. After the data release, the EUR/USD pair was seen trading at $1.1213 from around $1.1159 ahead of the release, whereas the GBP/USD pair was at $1.3404 from $1.3367 prior.
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.
Upcoming fundamentals: US Initial Jobless Claims
The US Dollar affecting fundamental data releases have moved to the second priority for most traders on Thursday, as the ECB rate announcement will occur during the day. However, at the same moment, as the ECB heads will speak, the yellow metal is more likely to be affected by the US Initial Jobless Claims. The data release will happen at 12:30 GMT.
Gold struggles with resistance at 1,346.69
Daily chart: The yellow metal trades below the combined resistance cluster made up of weekly R2 and monthly R1 respectively at 1,346.69 and 1,348.50. Previously, the metal reached the cluster amidst Tuesday's huge surge, and the commodity was struggling against it during Wednesday's trading session. However, the bullion could not break the cluster and fell back below. Due to various factors, as the aggregate technical indicators, market sentiment and fundamental data, it is most likely that the metal will struggle for some time until it breaks through the resistance and continues the surge.Daily chart
Hourly chart: On the hourly chart for gold it can be seen that the metal found support in the monthly R1 at 1,348.50 and weekly R2 at 1,346.69 by 12:00 GMT. However, it changed direction afterwards and fell to trade below the cluster by 15:00 GMT. The bullion found support in the lower Bollinger band at 1,342.54 by 15:00 GMT. Since then the yellow metal has been testing the before mentioned resistance cluster by pounding on it without relenting.
Hourly chart
Trader sentiment indicates at an upcoming surge
Meanwhile, OANDA Bank clients are largely bullish with respect to the bullion, precisely in 59.00%. In the meantime, SAXO bank clients are neutral bearish on the yellow metal, as 50.35% of positions are short.