- 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 ISM Manufacturing PMI
Consumer spending in the United States increased more than expected last month amid higher purchases of motor vehicles and higher inflation, official data revealed on Monday. According to the US Department of Commerce, consumer spending jumped 0.5% in September, following the preceding month's downwardly revised fall of 0.1% and meeting analysts' expectations. When adjusting for inflation, Monday's report showed consumer spending advanced 0.3% in the reported month after dropping 0.2% in August. In the meantime, the PCE Price Index grew 0.2% in September, the same pace as in the previous month. Year-over-year, the Index climbed 1.2%, the largest annual gain since November 2014, up from August's gain of 1.0%. Furthermore, the so-called core PCE Index increased 0.1% in the same month, compared to the 0.2% rise registered in August. On an annual basis, the core PCE Index advanced 1.7%, the similar increase in the preceding month. Officials from the US Federal Reserve meet for two days this week, starting Tuesday, to discuss. The Fed is not expected to raise interest rates at that meeting ahead of the presidential election; however, analysts widely anticipate a rate hike in December. Back in September, the Fed held rates steady for the sixth straight meeting.
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
Upcoming fundamentals: US ISM Manufacturing PMI
There are a lot of data releases set to affect the markets during Tuesday's trading session. However, there is almost nothing that could increase the volatility of the yellow metal, as only the US ISM Manufacturing PMI is worth mentioning. The index is set to be released at 14:00 GMT.
Gold breaks resistance and surges
Daily chart: The yellow metal surged on Tuesday morning, as it jumped from 1,276.34 to 1,279.83 and passed the monthly pivot point at 1,279.01. As the resistance of the pivot point has been broken, the way is free up to the level of 1,285.54, where the first weekly resistance is located. However, the outlook is just like it was yesterday with the exception of the newly calculated monthly PP, which did not provide sufficient resistance to even hinder the surge of the bullion. Gold is most likely to continue the surge during the day.Daily chart
Hourly chart: The hourly chart for gold shows that the metal fell on early Monday morning until it reached the weekly PP at 9:00 GMT. The bullion rebounded against the support only at 18:00 GMT, as it was kept down by the 20-hour SMA. Afterwards, the commodity was stopped by the upper Bollinger band, and remained rather flat until the 20-hour SMA came in from the downside and propelled the commodity price above the monthly PP at 1,279.01 by 5:00 GMT on Tuesday.
Hourly chart
Trader sentiment unchanged
During the weekend OANDA open long positions have decreased to 74.89%, compared to 75.87% on Monday. SAXO bank traders remain long, as 68.44% of traders are long, compared to 63.63% during the previous trading session.