- 71% of all SWFX positions are short, up from 61% yesterday
- Inability to breach weekly PP at 1,272.92 decreases downside risks
- Daily technical indicators remain undecided
- Economic events to watch over the next 24 hours: US Unemployment Claims; ECB Vice-President Constancio Speaks; FOMC Members Bullard, Lockhart, Kaplan and Williams Speak; UK Services PMI (Apr); Canadian Building Permits (Mar)
Gold rose on Thursday following three days of declines amid weaker global equities, but traded below a 15-month high as the US Dollar rebounded versus the Japanese Yen after a recent plunge. Gold had advanced to a 15-month peak of $1,303.60 on Monday as the Greenback plummeted against the Yen after the Bank of Japan stood pat on its monetary policy. Investor interest in gold remains strong. Assets in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, climbed 0.07% to 825.54 tonnes on Wednesday, the highest level in over two years.
American private employers added the fewest workers in three years in April, considerably below economists' expectations, with signs of weak hiring activity across most sectors. Employers added 156,000 jobs in April, according to Automatic Data Processing Inc. Economists had predicted an increase of 193,000. Moreover, ADP lowered March's gains to 194,000 from the prior estimate of 200,000. The ADP figures come ahead of the Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment. Economists are looking for US private payroll employment to have increased by 193,000 jobs in April, compared with 195,000 the month before. Total non-farm employment is expected to be 202,000. The unemployment rate is expected to remain at 5.0% recorded a month earlier. Fed policy makers are counting on a strengthening job market to pull the economy out from a first-quarter slump. San Francisco Fed President John Williams said he is optimistic about the US economy and was giving little weight to the slowdown in first quarter gross domestic product. Atlanta Federal Reserve President Dennis Lockhart said two rate hikes this year are certainly possible. In a separate economic report released Wednesday, the U.S. trade deficit shrank in March by almost 17% to $40.4 billion — the lowest level in more than a year.
Canada's exports fell sharply in March and the country's trade deficit with the rest of the world widened to a record level, fuelling doubts on the strength of the recovery in the resource-reliant economy. Canada posted a record trade deficit of C$3.41 billion in March, Statistics Canada reported, whereas expectations were for a smaller C$1.4 billion trade deficit. Exports dropped 4.8% following a dramatic 6.6% decline in the preceding month. The disappointing figures were led by slower exports of autos and parts, down 6%, as well as consumer goods, which slipped 4.6%. In the meantime, imports fell 2.4% to C$44.4 billion in March, with volumes edging down 0.3% and prices declining 2.1%. A decrease in imports of consumer goods and aircraft and other transportation equipment and parts was partially offset by higher imports of energy products. Exports to the US plunged 6.3% to $30.4 billion in March, while imports fell 4.8% to $28.9 billion. The Canadian economy shrank slightly less than expected in February, as the GDP dropped 0.1% after growing 0.6% in January. The Bank of Canada projects growth of 2.8% during the first quarter of the year, but warns that the Q1 boost is likely temporary, with much softer gains estimated for the second quarter.
Upcoming fundamentals: Major Stanford event to gather four Fed chiefs together
In the evening of Thursday, namely at 23:15 GMT, four presidents of Federal Reserve banks are going to talk at a discussion during the Hoover Institute conference organized by Stanford University. They are going to talk about the "International monetary policy and reform in practice". Participants will include St. Louis Fed President James Bullard, Atlanta Fed President Dennis Lockhart, Dallas Fed President Robert Kaplan and San Francisco's John Williams. Two of them have already expressed a hawkish view on interest rates earlier this week, by saying the markets are too pessimistic regarding the June FOMC meeting. Separately, St. Louis Fed chief James Bullard will speak at the Economic Summit of Santa Barbara County, California at 15:50 GMT.
Gold fails at weekly PP, forced to rebound
Bearish traders attempted to prolong a correction as lower as possible yesterday, but they met a tough support in face of the weekly pivot point at 1,272.92. Considering that this demand is reinforced by the monthly pivot $20 from below, gold's bears decided not to take additional risks. The bullion's spot closed just under the 1,280 mark. Both daily and weekly aggregate technical indicators are pointing to a recovery, as there are no single signals to sell the metal. In the wake of these events, the bulls keep eyeing the 2015 peak at 1,307.06.Daily chart
Based on the 1H chart, the current market price and the 200-hour SMA are closing the gap between them. Now there is only a $15 difference, which is expected to continue tightening over the next 24 hours. In case there is a consolidation below the moving average, a new goal for the spot will be set at the April 22 low of 1,227.34.
Hourly chart
71% of all SWFX traders expect gold to fall down
OANDA market has recovered from the lows we have observed 24 hours ago, as the distribution is favouring the bulls again. Today 51.89% of their positions are long on gold. Similarly to that, SAXO Bank clients are now 52.5% bullish, even though yesterday they kept bearish transactions in about 54% of all cases.