Gold continued to enjoy good support yesterday and overnight



Gold continued to enjoy good support yesterday and overnight. Supporting the upward momentum was disappointing US durable goods order data. While the adjustment to March durable goods data was positive, the April data indicates a slowdown in especially new orders and transportation equipment. The slowdown in transportation equipment is expected —
seasonally US car sales decline sharply in April. This component should pick up again in May. However, of more concern to us is an inventory level of manufactured durables and transportation equipment that continues to rise.

Another development that buoyed gold in overnight trade, was
a) the approval of gold’s use as collateral by European authorities and
b) the Shanghai Exchange looking at prospects for a gold lease market off the back of growing demand in China.

This morning however, we have seen someGold come under pressure as early profit-taking emerges in European markets ahead of the weekend and the end of the month. With the dollar still considerably weaker and sentiment still weighed down by Eurozone debt concerns, we don’t expect significant downside for the complex. Adding to gold’s weakness, we have seen selling in the physical market outpace buying for the first time in six weeks.

However, we doubt this will continue, and expect the physical market to return to net buyers again soon. For today, we will look closely at US personal consumption numbers for Q1:11 due for release, as well as personal spending numbers for April due for release tomorrow. Weakness in personal spending, combined with a build in inventory, would be read as a negative for the US economy in general. This could lead to further dollar weakness and a desire for the safety, both
bullish factors for Gold.

Gold support is at $1,518 and $1,514. Resistance is at $1,530 and $1,537.

Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also waiting
Read more

Gold Price Futures (GC) Technical Analysis – Trader Reaction to Minor 50% Level at $1954.80 Sets the Tone

Image
  Gold futures closed lower on Thursday but up from its low of the session as investors battled a number of factors including U.S. economic data and outside market influences. Earlier in the session, gold fell over 1%, as positive economic data elevated hopes for a quick recovery while dampening the investment appeal of the precious metal. On Thursday, December Comex gold futures settled at $1937.40, down $11.60 or -0.60%. On the data front, a drop in U.S. jobless claims reported Thursday and positive manufacturing data reported earlier in the week are taking some shine off gold. A weaker Euro is also weighing on dollar-denominated gold by driving up thU.S. Dollar Index. U.S. weekly jobless claims fell below 1 million last week for the second time since the pandemic started, but did not signal a strong recovery in the labor market because the drop largely reflected a change in the methodology used to address seasonal fluctuations in data. Earlier in the week, a report s
Read more

India, not Trump, is the real reason behind the crash in gold prices

Image
If you have been puzzled about the crash in gold prices after Donald Trump's election, you are in the company of almost every analyst and media outlet in the western world. Gold and silver are a major part of the research at The Arora Report. A combination of our proven precious metal algorithms, extensive resources and knowledge of the emerging markets led us to alert subscribers to The Arora Report early that gold was about to crash and the reason behind it. Immediately after the election, the net position of The Arora Report in gold, silver and miners has been short as part of a sophisticated strategy.
Read more