- 55% of all SWFX open positions are bearish
- Prices fluctuating around 1,330 level on Monday morning
- Gold fell on the clarity brought on by the new UK's prime minister
- Economic events to watch over the next 24 hours: US NAHB Housing Market Index (May); US Long-term TIC Net (May); Total TIC Net (May)
US industrial production rose more than expected in June on large gains in automotive manufacturing and utility output, reported the Federal Reserve, a sign that the economy was regaining momentum at the end of the second quarter. Industrial production, a broad gauge of output across American factories, mines and power plants, rose 0.6% month-on-month during the sixth month of year, compared to the 0.4% downturn seen in May, when it fell to red figures. Economist forecasted a 0.2% increase in June. It has shown halting signs of improvement after a downturn over the past 18 months caused by weak global demand, a strong dollar and the fall in oil prices. However, manufacturing output rose 0.4% in June after an upwardly revised 0.3% fall in May, while production of consumer goods rose 1.1%. Output of automotive products jumped 5.9%, while machinery output was up 1.1%. Output of computers, electronics and appliances increased 1.5%. Moreover, with overall output up, the percentage of industrial capacity in use rose to 75.4% in June from an unrevised 74.9% in May. The Fed sees capacity use as a leading indicator in deciding how much further the economy can grow before sparking higher inflation.
On Thursday, the Bank of England surprised markets by holding interest rates, despite hints from Governor Mark Carney that policy easing could be possible made earlier. Economists had expected a rate cut of 25 points to 0.25%, which would have been the first rate change in seven years. Following assumptions appeared after the Brexit referendum on 23 June, when Britons widely vote to leave the European Union. According to the minutes of the meeting, the Bank's Monetary Policy Committee voted by 8-1 to hold rates, as well as hinting that they "expect monetary policy to be loosened in August". Moreover, the BoE announced in its policy statement that they would give another month to evaluate the Brexit's impact on the economy and probably would raise stimulus measures in August. Currently, the bank's benchmark rate equals 0.5%. Following decision is widely appreciated by economists, since many experts are saying the Bank made the right decision by leaving interest rates unchanged. In the meantime, the Pound advanced while shares, in turn, dropped after the Bank of England unexpected decision. The Cable added around 1.4%, or two cents, versus the dollar reaching $1.3326.
Upcoming fundamentals: NAHB Housing and TIC Net
On Monday there are only two notable data releases, which could affect the yellow metal, as NAHB Housing Market Index will be released at 14:00 GMT. In the evening, the Long-term TIC NET and Total TIC Net for May will be published at 20:00 GMT. The TIC is the most important part of the capital account which also provides good insight into the demand for USD or investments.
Gold almost unchanged on Friday
Daily chart: The yellow metal saw some volatility on Friday, however, it did not change much during Friday's trading session, as the metal started day's trading at 1,336.50 and ended it at 1,335.12. With the start of the new week the bullion is losing value, as it started Monday's trading at 1,333.04 and fell to 1,328.22 by 5:15 GMT. If the metal continues to fall, it is set to meet the first weekly support at 1,312.88, and below this support there are no other major support line until the monthly PP at 1,295.11. However, daily aggregate technical indicators forecast a surge for gold today.Daily chart
Hourly chart: The hourly chart for gold shows that the yellow metal was fluctuation up and down during Friday's session, as the price did not pick any concrete direction during the session. The commodity was volatile between the levels of 1,338.63 from the upside and 1,322.50 from the downside. At the moment, it seems like the same could happen during Monday's session, as the yellow metal fell in the hour starting at 1:00 GMT, and it has been recovering since then by 6:00 GMT.
Hourly chart
SWFX traders bearish on Monday
Meanwhile, OANDA Bank clients are bullish with respect to the bullion, precisely in 64.79%. In the meantime, SAXO bank clients are less bullish on the yellow metal, as 61.62% of positions are long.