- 51% of all SWFX open positions are bearish
- Prices fluctuating around 1,330 level on Tuesday morning
- Gold was fluctuating with low volatility for the past 24 hours
- Economic events to watch over the next 24 hours: US Building Permits (June); US Housing Starts (June)
US industrial production rose more than expected in June on large gains in automotive manufacturing and utility output, reported the Federal Reserve, a sign that the economy was regaining momentum at the end of the second quarter. Industrial production, a broad gauge of output across American factories, mines and power plants, rose 0.6% month-on-month during the sixth month of year, compared to the 0.4% downturn seen in May, when it fell to red figures. Economist forecasted a 0.2% increase in June. It has shown halting signs of improvement after a downturn over the past 18 months caused by weak global demand, a strong dollar and the fall in oil prices. However, manufacturing output rose 0.4% in June after an upwardly revised 0.3% fall in May, while production of consumer goods rose 1.1%. Output of automotive products jumped 5.9%, while machinery output was up 1.1%. Output of computers, electronics and appliances increased 1.5%. Moreover, with overall output up, the percentage of industrial capacity in use rose to 75.4% in June from an unrevised 74.9% in May. The Fed sees capacity use as a leading indicator in deciding how much further the economy can grow before sparking higher inflation.
On Thursday, the Bank of England surprised markets by holding interest rates, despite hints from Governor Mark Carney that policy easing could be possible made earlier. Economists had expected a rate cut of 25 points to 0.25%, which would have been the first rate change in seven years. Following assumptions appeared after the Brexit referendum on 23 June, when Britons widely vote to leave the European Union. According to the minutes of the meeting, the Bank's Monetary Policy Committee voted by 8-1 to hold rates, as well as hinting that they "expect monetary policy to be loosened in August". Moreover, the BoE announced in its policy statement that they would give another month to evaluate the Brexit's impact on the economy and probably would raise stimulus measures in August. Currently, the bank's benchmark rate equals 0.5%. Following decision is widely appreciated by economists, since many experts are saying the Bank made the right decision by leaving interest rates unchanged. In the meantime, the Pound advanced while shares, in turn, dropped after the Bank of England unexpected decision. The Cable added around 1.4%, or two cents, versus the dollar reaching $1.3326.
Upcoming fundamentals: US construction data
Data that will influence the US Dollars strength and subsequently gold prices by indicating at the conditions in the US economy on Tuesday will be the construction numbers. Building permit data will be released at 12:30 GMT, and this release will be combined with the Housing Starts for June published at the same time. The data will be released as nominal numbers and also as monthly changes compared to May.
Gold slightly falls on Monday
Daily chart: The yellow metal slightly lost value during Monday's session, as it moved from 1,332.58 at the start of the trading session to 1,327.72 at the end of the day. However, on Tuesday morning the metal has stopped moving lower, as it met the 20-day SMA, which is located at 1,326.77. Since it is a possible rebound, and the daily aggregate technical indicators forecast a surge for the commodity during today's session, it is likely that gold will move to the weekly PP at 1,343.95. Although, a fall is also possible, in which case the commodity would fall to the weekly S1 at 1,312.88.Daily chart
Hourly chart: The hourly chart for gold shows that the yellow metal has been fluctuating around the level of 1,328 for the past 24 hours by 6:00 GMT on Tuesday. The commodities volatility has greatly reduced, as at the moment the Bollinger bands are offset from the 20-hour SMA just by value represented by three US dollars or 300 pips, which for gold is a very small movement. In addition, the range, between which the metal has been bouncing since Monday morning, is exactly between the weekly PP at 1,343.95 and the weekly S1 1,312.88.
Hourly chart
SWFX traders almost neutral on Tuesday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 65.07%. In the meantime, SAXO bank clients are less bullish on the yellow metal, as 60.77% of positions are long.