- 51% of all SWFX open positions are bearish
- Prices fluctuating around 1,330 level on Wednesday morning
- Gold was fluctuating with low volatility for the past 48 hours
- Economic events to watch over the next 24 hours: DOE Crude-Oil Inventories (July 15)
US housing starts and building permits rose in June, a sign that the country's housing market remained on solid footing at the end of the second quarter. Housing starts rebounded 4.8% on a monthly and seasonally adjusted basis to 1.189 million in June, sharply up compared with the market's expectation of a rise to 1.1150 million. Moreover, the US Census Bureau reported that contractors took out an additional 1.5% permits for construction of new dwellings in June, totaling 1.1153 million permits in the final month of Q2 2016. Analysts had expected an advance in the indicator to 1.165 million permits in the reported month. Housing starts are seen as an important pillar of the US economy. They not only reflect demand for housing, but also are an important catalyst for the construction sector. Moreover, residential construction added around 0.6 percentage points to first quarter gross domestic product. That was the biggest contribution in over six years. Meanwhile, building permits, a gauge of residential building intentions rose 4.8% to a seasonally adjusted annual pace of 1.189 million units. Permits had declined in two of the past three months. In addition, earlier this week, the latest data revealed that builder sentiment in the US ticked down in July, but pointed to ongoing housing growth.
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: Crude oil inventories
On Wednesday the yellow metals price might be affected only by the change in crude oil prices, which will be affected by the newest data on their stockpiles. DOE Crude-Oil Inventories data for July 15 will be released at 14:30 GMT. In addition to the crude oil inventory changes, gasoline and distillate inventories are set to be published together with the crude data. Moreover, Refinery Utilization changes are set to be released at the same time.
Gold trading flat on Wednesday morning
Daily chart: The yellow metal has been trading almost flat for the past three consecutive trading sessions, as it has stuck around the level of 1,330. At the moment, the metal was trading at 1,331.44 by 5:00 GMT on Wednesday. The situation started three session previously, when the bullion slightly lost value and reached the support provided by the 20-day SMA at 1,326.52. As the commodity keep fluctuating around the same level, the 20-day SMA is closing in on it even more, as on Wednesday the SMA is at 1,327.30.Daily chart
Hourly chart: The hourly chart for gold shows that the yellow metal has been fluctuating around the level of 1,330 for the past 48 hours by 6:00 GMT on Wednesday. The commodities volatility has greatly reduced, as at the moment the Bollinger bands are offset from the 20-hour SMA just by value represented by two US dollars or 200 pips, which for gold is a very small movement, and it is even smaller than yesterday's 300 pips. In addition, the range, between which the metal has been bouncing since Monday morning, is exactly between the weekly PP at 1,343.95 and the weekly S1 1,312.88.
Hourly chart
SWFX sentiment unchanged on Wednesday
Meanwhile, OANDA Bank clients are largely bullish with respect to the bullion, precisely in 67.57%. In the meantime, SAXO bank clients are less bullish on the yellow metal, as 59.05% of positions are long.