- 72% of all SWFX open positions are bearish
- Prices fluctuate around the 1,285 level
- Gold surges for the sixth consecutive trading session
- Economic events to watch over the next 24 hours: US Empire State Manufacturing index (June); US PPI Ex Food & Energy (May); US PPI (May); US Capacity Utilization (May); US Industrial Production (May); US Long-term TIC Net (April)
The US retail sales advanced more than expected during the previous month since Americans bought automobiles and a range of other significant goods, hinting that economic growth was gaining momentum despite a weak job creation. According to the Commerce Department release made on Tuesday, retail sales rose 0.5% in May after surging by an unrevised 1.3% in April. It is the second straight month of lifted gains from a year ago. The gains were spurred mainly by non-store retailers, online shopping and gasoline stations spending. Compared with a year earlier, the total amount of sales, in turn, expanded 2.5%. That is highly above the annual rate of inflation, which currently equals 1% this year. Overall, retail sales have strengthened considerably during the past two months despite a slow start at the beginning of the current year. Meanwhile, stabile gains in consumption will spur the economy helping to accelerate from a weak beginning at the start of the year and strengthening forecasts made by Federal Reserve officials that the economic slowdown is temporal. Moreover, a pickup in wages also will help ensure that households remain a mainstay of the economic expansion.
Although there were growing concerns over the strength of the Canadian economy, mostly amid rather weak expectation results of April's data, the latest employment change figures surprised with their positive readings. As a result, these concerns should ease, as stronger employment data should diminish Bank of Canada's willingness to cut interest rates. A total of 13,800 new jobs were added in May, after having unexpectedly fallen to -2,100 in April, as reported by the Statistics Canada. According to expectations, the employment change was likely to rise only up to 1,800 during the previous month, but the upbeat data definitely brings more brightness in the overall Canadian economic activity. Meanwhile, the strong jobs figures also sparked a decline in the unemployment rate, as it dropped to an almost one-year low in May, namely from 7.1% to 6.9%. Consequently, the so-called Loonie grew stronger with the release of the data, having risen up to 1.276 against the US Dollar. Meanwhile, being at 6.9%, the Canadian unemployment rate demonstrates the lowest figure since July 2015. The decline was influenced by a drop in the participation rate which slipped slightly to 65.7 from 65.8, but was mostly drive by strong growth in fulltime employment.
Upcoming fundamentals: Major data releases in the US
On Wednesday there are a lot of data releases coming from the US. First of all will be the Empire State Manufacturing index together with various PPI indices, which vary from simple PPI monthly change to year-to-year PPI Ex Food and Energy, at 12:30 GMT. Secondly at 13:15 GMT US Capacity Utilization index and the industrial production monthly changes will be released. Last but not least, at 20:00 GMT Long-term and Total TIC Net data will be released for the US and will show how the demand for investments in the US is doing. All of these data releases will affect the US Dollar, which always affects the bullion's prices.
Gold surges on Wednesday
Daily chart: The bullion scored gains for the fifth consecutive trading session on Tuesday, as it ended day's trading at 1,285.93. For comparison, the yellow metal was worth 1,243 on June 7. If this channel up movement continues, the metal will be at the 1,290 price today. However, it faces the weekly R1 at 1,289.03, and if this resistance is broken, the bullion would have a clear way north above the 1,300 mark, as the next resistance is at 1,305.22. Aggregate technical indicators forecast a continuation of the surge today.Daily chart
Hourly chart: The hourly chart shows that the bullion faced the first monthly resistance at 1,278.62 and rebounded against it. The bullion moved upwards back to the upper Bollinger band to resume its bouncing between it and the middle Bollinger band. At the moment, the yellow metal has again rebounded against the middle band and moves north. However, even the metal faces the weekly R1 at 1,289.03, if it continues to surge. On the other hand, gold might lose value if it bounces off any of the resistances to the level of 1,282.45 where the 55-hour SMA is located.
Hourly chart
SWFX traders increase their bearish positions even more on Wednesday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 56.58%. However, SAXO bank clients have become almost perfectly neutral, as 50.02% of all open positions are short.