- 54% of all SWFX open positions are long
- The yellow metal has been trading in a short term ascending channel for almost a month
- The 1,250 level played a crucial role in the metal's rebound
- Economic events to watch over the next 24 hours: US Core PCE Price Index; US Personal Spending; US Chicago PMI
The US economy expanded at its fastest pace since 2014 in the Q3 of 2016 amid higher exports and a rise in inventory investment, official data revealed on Friday. According to the US Department of Commerce, the economy grew 2.9% in the Q3, following the preceding quarter's 1.4% growth and surpassing the 2.5% pick up market forecast. It was the strongest expansion since the Q3 of 2014. However, the stronger than expected figures are unlikely to influence the Federal Reserve's views, as it is more focused on employment and inflation. US exports jumped 10% in the Q3, the largest increase since the Q4 of 2013, contributing 0.83% to GDP growth. The Q3 rise in exports was led by soybeans and analysts suggest that the momentum could be lost in the Q4. Inventory accumulation by businesses increased $12.6 billion in the reported quarter, contributing 0.61% to GDP growth. Investment in nonresidential structures advanced 5.4% in the Q3, the biggest gain since the Q2 of 2014, compared to the prior quarter's 2.1% drop. Meanwhile, business spending on equipment declined 2.7%, falling for the fourth consecutive month. Separately, the Labor Department said the Employment Cost Index remained unchanged at 0.6% in the Q3, in line with analysts' expectations
New orders for US manufactured durable goods dropped unexpectedly last month amid lower orders for computers and electronic products. According to the US Department of Commerce, new orders for capital goods fell 0.1% in September, the most since February, after rising 0.1% in August, whereas analysts had expectations for a 0.1% increase. Meanwhile, orders for core durable goods advanced 0.2% in the same month, following August's 0.2% decline and meeting analysts' forecasts. Other data released by the National Association of Realtors on Thursday showed the Pending Home Sales Index climbed 1.5% to 110.0 in September after falling 2.5% to 108.4 in the preceding month, while economists anticipated an acceleration of 1.2%. Moreover, the Index jumped 2.4% compared with the same month a year ago. In the meantime, the Department of Labor said the number of Americans filing for unemployment benefits dropped to 258,000 in the week ended October 21, compared to the previous week's revised up 261,000 claims. That marked 86 consecutive weeks of claims below the 300,000 level, the longest streak since 1973. Also, the number of continuing claims declined to 2.04 million in the week ending October 15.
Upcoming fundamentals: Minor US data releases
At 12:30 GMT data will be incoming and affecting the strength of the Greenback. The US data bundle will consist of the US Core PCE Price Index, US Personal Spending and Income. In addition, at 13:45 GMT the US Chicago PMI is set to be released.
Gold surges in accordance with pattern
Daily chart: On early Monday morning the yellow metal had slightly retreated, as it approached a strong support cluster just below it. The cluster is made up of the monthly S2 at 1,273.23, weekly PP at 1,272.97 and the 20 and 200-day SMAs at 1,273. Moreover, the ascending channel pattern's lower trend line is located at 1,270.97. Due to that it is most likely that the metal will rebound against the cluster and surge, as the way up to the 1,285.54 level, where the first weekly resistance is located at, is free.Daily chart
Hourly chart: The hourly chart for gold looks very similar to other financial instruments, which are traded against the US Dollar. The metal struggled with resistance during Friday's trading session until it finally broke out of the cluster and surged to 1,282.59 by 18:00 GMT. However, afterwards the bullion retreated until it found support in the cluster, which previously provided resistance near the level of 1,273.
Hourly chart
SWFX traders remain bullish
During the weekend OANDA open long positions have increased to 75.87%, compared to 72.61% on Friday. SAXO bank traders remain long, as 63.63% of traders are long, compared to 63.15% during the previous trading session. .