- 51% of all SWFX open positions are bearish
- Prices reached 1,248.48 level
- On Tuesday the bullion started to lose its gains
- Economic events to watch over the next 24 hours: US Unit Labor Costs (1Q)
The last Friday's US economy release proved to be unexpectedly disappointing since the employment picture showed the weakest payroll gains for at least six years. According to the data, the nonfarm payrolls advanced by a seasonally adjusted 38,000 for the previous month, strongly below a revised of 123,000 figure registered for April as well as strongly below expectations for an acceleration of about 160,000. Overall, employers employed 59,000 fewer workers in March and April than previously reported. Majority of economists agreed that following Friday's disappointing US employment report could eliminate the chance that Fed officials would tighten policy during their meeting on June 14-15 in Washington as well as may make it difficult raise the rate in July. The report, which was also released in the same day by the Labor Department is unemployment rate which went down to 4.7%. Meanwhile, following rate does not include those who did not actively look for employment or the underemployed who were working part time for economic reasons. The following data demonstrates the harshest drop in almost nine years since people abandon the labour force. Overall, the steep decline in the labour force during the last couple months of course defies hopes that disenfranchised workers are going to return to the jobs market.
According to the latest release, the US labour market conditions index (LMCI) showed a 4.8 decline for the previous month, taking into account a revised 3.4 drop also for May. The following data confirms the fifth successive decrease simultaneously is maintaining a very disappointing trend seen for a whole 2016 year. The freshly release data could provoke fresh doubts whether the Federal Reserve will be able to raise interest rates in the near future even despite the purely negative Friday's employment data. Moreover, following the declines in the previous two months, the overall down-trend has spurred and this is the longest pace below the zero level since the 2007/08 financial crash. There is an important risk that it impossible for companies to find suitable staff, especially as delivery backlogs and longer delivery times has been significant features in recent PMI data which suggests capacity constraints. Also, On Monday the Federal Reserve Chair Janet Yellen held a speech and drop a hint that interest rate raise still could be possible since positive economic releases have outweighed the negative. Meanwhile, in case if the US economy gives further indications in the upcoming month that it is slowing, any expectations about possible monetary rate increase will disappear.
Upcoming fundamentals: US Unit Labor Costs
With the bullion taken into account, there is only one notable data release today, which is the quarterly US Unit Labor Costs at 12:30 GMT. It is forecasted by experts to be an increase of 4%, which would be an early indicator of inflation, as increase in labor costs is usually transferred to the price of goods. Previously the preliminary data showed a 4.1% increase. However, the change indicator was also revised for the fourth quarter of 2015 from initial 3.3% to 2.7%. First quarter labor costs changes have shown themselves to be the highest compared with other quarters, since salary increases mostly happen with the start of a new year.
Gold regains losses as US Dollar falls on Friday
Daily chart: After US Non-Farm Employment data sent gold drastically up from 1,210.49 to 1,243.86, the bullion did not rebound and continued surging on Monday passing the 55-day SMA at 1,244.09. At the moment, the yellow metal has lost a little of its value and is trading at 1,243.73 per ounce. In the meantime, since it had passed the 55-day SMA, it could move up to the first weekly resistance at 1,259.11. However, if the metal keeps struggling with the simple moving average and falls, then a move to the monthly pivot points at 1,239.18 is most likely. Technical indicators are predicting a downfall for gold today.Daily chart
Hourly chart: On the hourly chart it can be seen that the Gold surge against the US Dollar on Monday was stopped by the resistance of the upper Bollinger band. The yellow metal struggled against it, but nevertheless bounced off and has already passed the middle Bollinger band. In addition, the pair has now passed below the daily pivot point and faces the lower Bollinger band at 1,241.13 and daily S1 at 1,240.21. Further below are the daily S2 and 55-hour SMA at 1,235.76.
Hourly chart
SWFX market sentiment becomes bullish on Monday
Meanwhile, OANDA and SAXO Bank clients are more bullish than SWFX traders with respect to the bullion, precisely in 65.16% and 55.41% of all cases, correspondingly, in the Tuesday morning on June 7.