- 54% of all SWFX open positions are bullish, the highest number in 16 weeks
- Prices rebounded to 1,215, breaking a 9-day downfall
- Bullion broke 1H chart pattern
- Economic events to watch over the next 24 hours: German Manufacturing PMI (May); French Manufacturing PMI (May); Italian Manufacturing PMI (May); Euro Zone's aggregate Manufacturing PMI (May); US Manufacturing ISM (May)
In line with a drop noted in the preceding month, a report on consumer confidence released on Tuesday showed that the negative tendency is developing. According to the Conference Board, the confidence unexpectedly diminished further in May, slipping to its lowest level in six months, reaching the 92.6 mark from a revised 94.7 in April. Such a release is well below the post-recession high of 103.8 set in the beginning of the previous year. Meanwhile, majority of economists had expected the index to advance. Following data signalise that Americans continue to be cautious about the economy despite the seven years' recovery phase. However, their spending habits show that they are more upbeat than the confidence report suggests. In April, for example, consumer spending rose at the fastest rate since 2009. Also, consumers were relatively less optimistic about the short-term outlook, with the expectations index dipping to 79.0 in May from 79.7 in April. The proportion of consumers expecting business conditions to improve over the next six months increased from 13.8% to 15.1%. Overall a strong dollar and poor global demand has hurt exports while upcoming Novembers' presidential election also is contributing to domestic economic uncertainty. Therefore, consumers remain cautious about the outlook for business and labor market conditions.
China's official factory gauge stayed above the dividing line that signals improving conditions for a third month. The manufacturing purchasing managers index remained at 50.1 in May, barely above the 50-mark that separates expansion in activity from contraction on a monthly basis, matching April's level and compared with economists' median estimate of 50. Meanwhile, a similar survey showed activity in China's services sector continued to expand but at a slower pace, with the official reading at 53.1 in May versus 53.5 in April. Numbers above 50 indicate improving conditions. Despite activity in China's manufacturing sector unexpectedly expanded for the third straight month in May, growth still remains weak, suggesting the world's second-largest economy is still struggling to regain traction. Meanwhile, manufacturing data showed that measures of output and purchases quantity rose, with small and medium-sized enterprises picking up. For the services gauge, declines in input prices and business activity expectations weighed on the index. Moreover, a separate PMI reading from Caixin Media and Markit Economics fell to 49.2 in May, matching economists' estimates and down from 49.4 in April. The lack of any pick-up in external trade underscores the economy's reliance on domestic industries.
Upcoming fundamentals: European manufacturing PMI's incoming
Most influential European Union countries are about to publish their PMI Manufacturing indices for May. Among them is Italy at 7:45 GMT, France at 7:50 GMT and Germany at 7:55 GMT. After the individual countries' announcements the aggregate Euro zone's index will be out at 8:00 GMT. Experts are concentrating their attention at the German index and the aggregate union's index. The predictions are 52.4 points for German purchasing manager's index and 51.5 for the whole currency bloc. In the meantime, at 8:30 GMT the United Kingdom will publish its manufacturing PMI, which is forecasted at 49.9 points, and US will release the manufacturing ISM at 14:00 GMT, which is expected to be at 50.5 points.
Gold rebounded on Tuesday
Daily chart: For the first time in ten days the bullion has finally gained value on Tuesday of this week. The price rebounded only slightly, and after touching the 100-day SMA at 1,218 gold was forced to make a setback to close at 1,214. Nevertheless, the outlook remains largely negative and the metal will feel bearish pressure as long as it keeps fluctuating under the 100-day SMA and the weekly pivot point of 1,224.96. A spike above here would allow for another streak of gains in the direction of the fresh June monthly pivot point at 1,239.17. From the downside, the most important support is represented by the weekly S1 at 1,193.94.Daily chart
Hourly chart: The bullion rebounded, as bears were aiming at the first weekly support of 1,193.94, followed by the long-term 2013-2015 downtrend at 1,186.25. However, the yellow metal rebounded on Tuesday against the 1H chart's channel down pattern's lower boarder and moved up to its upper line, through which it broke through at 1,210.00. At the moment it is still volatile but, surging near 1,215.45 and moving to the 200-hour SMA at 1,228.08. Although it is unlikely that it would be reached this week.
Hourly chart
SWFX market sentiment turns positive on gold
Meanwhile, OANDA and SAXO Bank clients are even more positive than yesterday with respect to gold, precisely in 71.82% and 62.19% of all cases in the morning on June 1.