- Market sentiment is at lowest level in almost five weeks, only 32% bullish
- Bullish traders are focused on violating the current April high and February high at 1,262/63
- Daily technical indicators continue to be bullish on gold
- Economic events to watch over the next 24 hours: Sweden Central Bank Interest Rate Decision; ECB Interest Rate Decision; US Unemployment Claims (Apr 16) and Philadelphia Fed Manufacturing Survey (Apr); UK Retail Sales (Mar); BOE Governor Carney Speaks (Mar)
Gold retained overnight losses on Thursday as the US Dollar strengthened versus the Euro and equities rose. The Greenback climbed 0.5% against a basket of major currencies on Wednesday as the Euro slid ahead of the European Central Bank's meeting later in the day. Risk appetite also supported global shares, which tracked oil prices higher. Crude advanced 4% yesterday as US crude stocks rose less than expected.
Sales of previously-owned homes recovered more than expected in March after plunging in February, indicating the housing market recovery remained intact despite signs of economic slowdown in the first quarter. According to the National Association of Realtors, existing home sales soared 5.1% to an annual rate of 5.33 million units last month. Economists had expected sales increasing 3.5% to a 5.30 million-unit pace in March. February's sales pace was revised slightly down to 5.07 million units from the previously reported 5.08 million units. March sales were up 1.5% from a year ago. The housing sales numbers have been quite volatile in the first quarter of 2016. March's rebound comes after a sturdy start to the year in January, when sales reached their fastest pace in six months, followed by a decline in February. The US housing is being supported by a buoyant labour market, which has led to acceleration in household formation. Nevertheless, sales remain constrained by a dearth of homes available for sale, which is limiting choices for buyers. At March's sales pace, it would take 4.5 months to clear the stock of houses on the market, up from 4.4 months in February. A six-month supply is considered as a healthy balance between supply and demand. The median house price increased 5.7% from a year ago to $222,700 last month.
Canadian wholesale sales disappointed in February, recording the biggest monthly fall in more than a year amid steep declines in the machinery and auto sectors. Wholesale trade dropped 2.2% from January to a seasonally adjusted C$55.77 billion, Statistics Canada reported. Economists' expectations were for a 0.4% retreat. The fall was the largest since the 3.6% decline recorded in January 2015. Lower sales were registered in five of seven subsectors, accounting for 66% of total wholesale trade. In volume terms, sales dropped 1.9%, while inventories climbed 0.2% to C$73.16 billion. Wholesale sales data is another sign, along with a decline in February manufacturing shipments, that Canada's gross domestic product is likely to be weak for February. The GDP report is due out next week. Last week, the Bank of Canada maintained its benchmark interest rate unchanged at 0.5%, referring to the positive impact of new fiscal measures from the federal government. However, the central bank warned that the Canadian economy continues to face strong economic headwinds, including sluggish foreign demand and a recent currency rally, which could slow growth in the non-resource sector. Canada's resource-reliant economy has experienced the biggest hit among Group of Seven economies from the commodity-price plunge.
Upcoming fundamentals: Central bank meetings and US Philly Fed data in focus
Central banks of the Euro zone and Sweden are making their scheduled interest rate and other monetary policy decisions on Thursday at 11:45 GMT and 07:30 GMT, respectively. Although the key watch is going to be on both of them, there is some important US data due, which is also worth paying attention to. In particular, the weekly figures on claims for unemployment benefits will be out at 12:30 GMT. Analysts suggest that last week's decline in the number of claims was temporary and it will bounce back to 265,000 for the week ended April 16, up from 253,000 previously. Alongside, the same time slot is reserved for the monthly statistics from the Philadelphia Federal Reserve Bank. It releases the manufacturing survey index, which is forecasted to come out at only 8.0 points in April, down from 12.4 in March. However, any reading above zero continues to indicate improving conditions for producing companies in this region.
Gold: recovery hopes remain in place
Yesterday the yellow metal was growing as high as 1,258 or above the first weekly resistance line. Later, however, the bullish US Dollar sent gold prices below 1,245 where the trading closed. However, our bullish estimates remain intact as the price is provided with support from the monthly and weekly pivot points. Moreover, the 20 and 55-day SMA are safeguarding the area between 1,238.31 and 1,233.11. The current April high of 1,262.72 is maintaining its status of the main short-term bullish goal. Meanwhile, there are no "sell" signals provided by any daily or weekly technical indicators today.Daily chart
Last few hours of Wednesday's trading were the critical ones, because then the bulls tried not to let the price fall below the 200-hour SMA. The April 12 high at 1,262.67 will continue acting as the next mid-term bullish goal, while the only major intermediate resistance is yesterday's peak of 1,257.92.
Hourly chart
Sentiment drops; now at lowest level in 4.5 weeks
Bullish market portion has tightened in the OANDA market, where about 56% of all positions are positive at the moment (59% yesterday). Meanwhile, SAXO Bank clients remain 53% negative with respect to the observed precious metal (54% on April 20).