- 57% of all SWFX open positions are long
- The yellow metal recently formed a short term ascending channel
- The 1,250 psychological level provided support for a week
- Economic events to watch over the next 24 hours: US CB Consumer Confidence; ECB President Draghi Speaks
Activity in the US manufacturing sector expanded more than expected last month, according to a private survey published on Monday. The Market Research Group said that its Preliminary Manufacturing Purchasing Manager's Index for the United States jumped to 53.2 in October, following the preceding month's final reading of 51.5 and surpassing the 51.6 market forecast. Any reading above 50 points indicates an expansion and is based on a survey of manufacturers across the country. US manufacturers recorded strongest upturn in business conditions for 12 months in October, while both output and new order growth touched their one-year peaks last month. The US manufacturing sector was hit severely by the US Dollar's sharp appreciation and weak global economic growth. Back in September, the PMI rebounded from a contractionary reading of 49.4, the first drop below the 50 pointlevel since February. Furthermore, some respondents mentioned there was a rise in international and domestic sales.
Manufacturing activity dropped less than expected in the Third Federal Reserve District, a monthly report revealed on Thursday. The Philly Fed's Manufacturing Index came in at 9.7 in October, compared to last month's 12.8, while market analysts anticipated a steeper decrease to 5.2 during the reported period. However, the three-month average rose to 8.2 in October from the previous month's 2.7 points. Furthermore, the six-month outlook advanced to 38.6 from September's 35.2. Other data released by the US Department of Labor showed the number first-time claims for state unemployment benefits increased 13,000 to a seasonally adjusted 260,000 in the week ended October 15, following the preceding week's upwardly revised figure of 247,000 and falling behind the 251,000 market forecast. Filings for US unemployment benefits remained below the 300,000 level for the 85th consecutive week, the longest streak since 1973. The increase in initial claims was partly due to Hurricane Matthew, which caused flooding and damage in the Southeast region. The four-week moving average, considered as a better measure of labor market trends, jumped 2,250 to 251,750 last week. Moreover, continuous claims rose 7,000 to 2.06 million in the week ending October 8.
Upcoming fundamentals: US Consumer Confidence and Mario Draghi's speech
The main event on Tuesday is going to be the ECB president's Mario Draghi's speech at 15:30 GMT. Markets have become flat in the expectations of information regarding the ECB's monetary policy in the future. However, before that the US CB Consumer Confidence data will be published at 14:00 GMT.
Gold searches for support
Daily chart: The yellow metal struggled to find support on Tuesday morning, as the metal bounced around the weekly pivot point at 1,263.46. Previously, on Monday the bullion moved lower by the end of the day's trading session, and it stopped exactly at the weekly PP at 1,263.46. However, on Tuesday the metal made a slight rebound and moved higher. In the meantime, daily aggregate technical indicators continue to forecast no changes, which means that the metal is most likely set to continue fluctuating between the 200-day SMA and the weekly PP.Daily chart
Hourly chart: The hourly chart for gold reveals some interesting information, as the rate kept bouncing between various levels of significance on Monday morning before it got squeezed in between the 55 and 100-day SMAs. The result was massive volatility, as if a rubber ball would get squeezed in a door and then shoots out. During the next few hours following the squeeze at 11:00 GMT, by 16:00 GMT the metal had fluctuated between the levels of 1,272 and 1,260. However, most recently the bullion came out to the upside from the mess and left all the levels of significance below it.
Hourly chart
Trader outlook unchanged
Meanwhile, OANDA Bank clients remain majorly bullish with respect to the bullion, as on Tuesday morning 75.16% of all positions were long. In the meantime, SAXO bank clients show a similar trend with 69.25% of all positions being held by bulls.