- 68% of all SWFX open positions are bearish
- Prices fluctuate around the 1,300 level
- Gold surges for the seventh consecutive trading session
- Economic events to watch over the next 24 hours: US CPI (May); US Initial Jobless Claims (June 11); US Current Account; US NAHB Housing Market Index (June);
US Federal Reserve was forced to keep the target range for the Federal Funds rate flat at 0.25-0.50% after its June 14-15 meeting, owing to continuous risks to economic outlook and stagnating inflation expectations. Domestic data has been uneven recently, with mild payrolls report considered to be the key trigger for accepting the status-quo. All member of the Federal Open Market Committee (FOMC) voted for the decision, with Kansas City Fed President Esther George abandoning her hawkish call to raise the benchmark by 25 basis points. Janet Yellen, the Chair, agreed that there are some downside forces to interest rates that may be longlasting. On the short-term basis, she admitted that the upcoming UK referendum on EU membership has weighed on the Fed's decision to postpone the upward revision to the Fed Funds target range. The famous dot plot, which reveals individual members' perceptions of how interest rates are going to evolve in the future, showed that participants continue eyeing two interest rate hikes in 2016 and three in 2017. The terminal rate for the long run has shifted down to 3% from 3.3% in the March projection. The Fed estimates a 2% GDP growth every year during 2016-2018, also reflecting a moderate downward change in the outlook. Consumer prices, measured by the PCE Index, however, are forecasted to increase 1.4% this year. This indicates to an improvement from 1.2% seen three months ago.
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: US CPI, employment and housing data
Most data concerning gold is coming out from the US today, as consumption, housing and employment are on the radar. First of all the US CPI data will be published at 12:30 GMT, and it includes the monthly, yearly changes. In addition, the monthly and yearly CPI Ex Food & Energy indices will be published. At the same time, the US will publish initial jobless claims for the past week and the first quarter's current account. Later on, at 14:00 GMT the NAHB Housing Market Index will be released.
Gold passes the 1,300 mark on Wednesday
Daily chart: The bullion is not stopping, and it has booked gains for the seventh consecutive trading session. At the moment, the yellow metal is at 1,302.44, which is just below the second weekly resistance at 1,305.22 and the 2015 high level of 1,307.07. If the bullion breaks through the resistance, there is nothing stopping it until the level of 1,332.35, where the weekly R3 is located. However, if the metal bounces off the resistance cluster provided by the two before mentioned levels, it might fall back to the level of the monthly R1 at 1,278.62.Daily chart
Hourly chart: The hourly chart shows that gold did not go north as smooth as it might seem at the first look. The yellow metal did go down midday on Wednesday to the monthly R1 at 1,278.62, and the support provided by it worked, as the bullion surged afterwards. The weekly R1 did not put up much resistance, as gold went right through it. Since then, gold has not been volatile and has been steadily moving upward to the level of 1,300, which it passed in the early Thursday morning. However, daily aggregate technical indicators forecast, that the metal will stay unchanged today.
Hourly chart
SWFX traders decrease bearish sentiment on Thursday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 55.39%. However, SAXO bank clients have shifted to the bearish side with 51.96% of open positions being short.