- Percentage of buy orders jumped from 62 to 77%
- positioning in the SWFX market remains perfectly stable
- Key resistance is at 1,330 dollars
- Price to be supported by the 2015 high at 1,307/05
- Economic events to watch over the next 24 hours: UK Referendum Reaction, US Core Durable Goods Orders, UoM Consumer Sentiment
The number of people applying first-time unemployment benefits in the US fell from 277,000 to 259,000, gradually beating the 277,000 forecast, as reported by the Department of Labor. Strong data suggests that the labor market is on the path to recover from its recent period of softness. Moreover, the governor of the Federal Reserve Janet Yellen stated, that a lower figure of the Unemployment Claims indicates improvements in the labor market overall, having a greater impact than the poor payrolls data. In the meantime, the US Manufacturing PMI also showed signs of improvements, with the index rising from 50.7 to 51.4 in May. Despite such an increase, the index still remained below its 2009- 2013 average of 54.1. The main gauge of weaker-than-average results were falling oil prices, hurting manufacturers connected with the energy industry by lowering demand for equipment in their sector.
Finally, the US New Home Sales numbers were released, coming out worse than anticipated, with sales falling 6% to 551,000 units (annualised) in May. Moreover, the April's reading was revised downward, namely from 619,000 to 586,000, as reported by the Department of Commerce, also contributing to the poor situation.
Gold in anticipation of July FOMC meeting
Considering the latest developments, the current context is favourable for a stronger precious metal. From one side, 'Brexit' by itself if a risk-off event. At the same time, this pushes further away the date of the next increase in the federal funds rate, creating an additional reason for gold to appreciate, at least in dollar terms.
Meanwhile, further action in the price are to be determined by what the officials and leaders from around the world have to say about their response to Britain leaving the EU. This means that traditional fundamentals are to play only a minor role. Nevertheless today we are going to see whether the number of orders keeps growing and whether the latest surge in consumer sentiment index was justified.
Gold's rally capped by 1,330
Gold spiked more than 100 dollars from the 100-day SMA at 1,250 amid the news from the UK, but the rally appears to have been stopped by the rising resistance trend-line. The trend-line has been able to contain rallies since last year's August, and is seen capable of halting today's advancement as well. Accordingly, we expect the price to close beneath 1,330 and then to retreat to a potentially strong demand area circa 1,307, where the 2015 highs is now joined by the 50% retracement of today's surge.Daily chart
Gold is already showing signs of stabilisation near the 2015 high, as it retreats from today's high of 1,359, and the price is thus likely to stay above the support area at 1,307/05 for now. An additional demand level is seen at 1,292 dollars (61.8% retracement).
Hourly chart
Surprisingly stable sentiment
There have been no significant changes in the distribution between the longs and shorts at other brokers as well. Thus, the percentage of bulls at OANDA fell only one percentage point to 60%, while at SAXO Bank there are now 54% of positions being long compared to 55% recorded yesterday.