- Sentiment is bullish (51%) for the first time in 45 trading days
- Ability to keep prices above 1,231 will set ground for stronger bullish action in the short-term
- Initial resistance is the monthly PP/weekly R1 at 1,241; more support is approaching (55-day SMA)
- Economic events to watch over the next 24 hours: German Current Account and Trade Balance (Feb); French Industrial Production (Feb); US Wholesale Inventories (Feb); FOMC Member Dudley Speaks; Swiss CPI (Mar); UK Industrial Production (Feb) and Trade Balance (Feb); UK NIESR GDP Estimate (3M-Mar); Canadian Housing Starts (Mar) and Employment Change/Unemployment Rate (Mar)
Gold traded near the highest level in two weeks on Friday and was set to record its strongest week in five as the Fed's cautious approach to interest rate hikes and weakness in the US Dollar boosted the precious metal's appeal. Fed Chair Janet Yellen said that as the US economy remains on a solid course with some signs of inflation. Moreover, seven years after the severe financial crisis, the US labour market was now close to full employment, arguing that inflation would not be held down much longer by a strong US Dollar and low oil prices. Therefore, the Fed remains on track for further interest rate increases. A number of private economists believe the next hike will not occur until June.
Canada's building permits increased the most in over two years in February, as the oil-rich Alberta province reported a surprise construction boom, driven by strong demand for commercial buildings. The value of Canadian building permits issued in February skyrocketed by 15.5% to C$7.4 billion, the biggest gain since January 2014, according to Statistics Canada. The figures came in better than expected, with market consensus anticipating a more modest increase of 3.9% for the reported month. Meanwhile, January's decrease was slightly revised down to 9.5%. The value of permits issued in Alberta surged 47.7% amid higher construction intentions for commercial buildings and institutional structures. Permits issued in the province dropped by 4.4% in January. Canada's non-residential construction intentions on a national level were the main contributor to the overall increase, advancing 33.1%, the most since August 2012. Meanwhile, residential building permits recovered 5% on a national level, led by the most-populated provinces of Ontario and Alberta. Other residential data from February was robust. Canada's housing starts overshot expectations by soaring to 212,594 units, following the downwardly revised 165,071 units posted in January.
Fed policy makers signalled an interest-rate hike in April is unlikely, minutes of the March policy meeting showed, confirming market's growing anticipation that the US central bank will act cautiously until the global economy regains steam. US central bankers, who maintained the benchmark interest rate unchanged in March in a range of 0.25% to 0.5%, discussed the relative strength of the world's number one economy, which contrasted against persistent global headwinds. They were concerned that slowing world growth could undermine corporate investment plans and hit US exports. Fed officials expected those risks to subside only slowly. However, it was not a unanimous view. Eight of seventeen officials argued risks to the US economy were tilted to the downside, while nine said risks were balanced and none saw much likelihood that economic output would overshoot their estimates. Some officials said that the US was at or near full employment with inflation starting to climb. Only two officials wanted to raise rates at the March meeting, according to the minutes. Policy makers had signalled at the close of March meeting that they expected to hike interest rates twice in 2016 but the timing of the hikes still remains up in the air. The Fed's next meeting is April 26-27.
Upcoming fundamentals: Canadian employment to increase as UK production remains weak
There are plenty data releases from both sides of the Atlantic on April 8. This is going to be the day of British manufacturing numbers for February. Output is set to add 0.1% on a monthly basis, following a 0.3% increase in January. Figures from the Office for National Statistics will probably confirm that UK factories are struggling amid weakness globally and even the weaker Sterling is unable to improve the conditions. Meanwhile, Canadian labour market data is due at 12:30 GMT. Analysts expect 10,000 job gains in March after 2,300 positions had been eliminated in the preceding month. The jobless rate is foreseen unchanged at 7.3%.
Gold awaits consolidation above 20-day SMA
Following Thursday's spike in gold prices, this precious metal is now finally awaiting a consolidation above a busy cluster of resistances placed between 1,224 and 1,231. The upper band of it is the 20-day SMA, and exactly a closure above this line would considerably improve the bullion's future forecast. To support this view, the new weekly technical indicators are strongly favouring a rally over the upcoming five-day period. At the same time, another failure of the bulls, if happens, is unlikely to become long lasting, as XAU/USD will then encounter a demand line in face of the 55-day SMA at 1,213.Daily chart
Based on the 1H chart, there is a relatively high probability of more gains in the foreseeable future. This will likely happen, if the bullion maintains the price above 1,232 on April 8. Otherwise, it will return below the March 30-April 5 downtrend and will have to deal with the 200-hour SMA a bit lower at 1,228. The rally should in turn remain focused on the 1,244 mark, namely the March 30 peak.
Hourly chart
SWFX sentiment turns bullish
OANDA sentiment is volatile from day to day, as by Friday morning the bullish share slipped back below 59%. This is down from more than 62% yesterday. Meanwhile, SAXO Bank expectations are completely neutral at the moment, as the market is divided 50/50% in terms of live positions.