Gold extended gains into Tuesday amid a weaker US Dollar and equities, as investors remain cautious ahead of policy meeting of the Fed and Bank of Japan later in the week. While the Fed is not expected to hike interest rates at the meeting, market participants will be looking at the US central bank's assessment of the global economy and its monetary policy outlook. Meanwhile, it remains highly uncertain whether the BoJ will actually deliver fresh stimulus this week. Assets in SPDR Gold Trust, the largest gold-backed exchange-traded fund, slid 0.3% to 802.65 tonnes on Monday, though remained not too far off a two-year high hit earlier this year.
New US single-family home sales unexpectedly fell in March, but the decline was mainly concentrated in the West region, implying that the housing market continued to strengthen. According to the Commerce Department, sales of newly built homes in the US unexpectedly dropped 1.5% to 511,000 on an annual pace, reaching a three-month low despite better supplies as well as lower prices. Meanwhile, economists had expected a rise of 1.6% to an annualised pace of 520,000 homes. Despite a considerable slide in new construction in March, the positive tendency still could be observed, since the data is 14% higher compared to the preceding year, signalling a continued strength of the US economy. March's sales pace put the market on track to overshoot 2015's total 501,000 new homes, the highest annual level since 2007. The report also showed inventory expanded to its highest level since September. Based on the current sales pace, it would take 5.8 months to exhaust the supply of newly built homes, compared with 5.6 months in the previous month. The total number of new homes for sale at the end of the month was 246,000, the highest figure since September 2009. Meanwhile, the median price of a newly built home plunged to $288,000 from $297,400 in February. That was down 1.8% from a year earlier.
Canada's annual inflation rate slowed in March as lower gasoline prices offset increases in food and shelter costs, while a robust data on retail sales offered a positive sign for first-quarter economic growth. Canada's all-items consumer-price index advanced 1.3% from a year earlier, Statistics Canada said. The March annual core-inflation rate, which strips out volatile components such as some food and energy prices, surged 2.1%. That followed a 1.9% advance the previous month and was ahead of the 1.7% expectations. Measured on a monthly basis, the consumer-price index climbed 0.6%, the highest in almost a year, while core inflation rose 0.7%, compared with the 0.4% forecast. Prices for food jumped 3.6% on an annual basis, following a 3.9% gain the previous month. Prices for food purchased from stores increased 4.0% compared with the same month last year, while prices for shelter rose 1.1%. Offsetting the gains were a 1.0% annual drop in Statistics Canada's transportation index, which includes gasoline. Clothing and footwear prices slid 0.4%. Canadian retail sales had a surprise gain in February with strength in most categories led by motor vehicle dealers. Sales increased 0.4% to C$44.2 billion, Statistics Canada reported. Motor vehicle and parts sales rose 1% to C$11.5 billion on the month, and have soared 15.3% over the last 12 months.
Upcoming fundamentals: Q1 Australian inflation estimated at 0.3%
Gold raises probability of recovery
Yellow metal acted decisively on Monday and provided the price with a robust enough increase, in order to close back above the vital 55-day SMA. Therefore, for now the bearish case became a temporarily solved issue. XAU/USD should be additionally backed by the March-April uptrend near 1,233.40, but any closure under here is going to expose the weekly S1/Bollinger band at 1,216. We are not ruling out a sell off as gold will be pressed down by the primary resistance - the monthly and weekly pivot points at 1,241/43.6/10 of all positions are short on Tuesday
Spreads (avg,pip) / Trading volume / Volatility
Market participants foresee the price of gold at 1,260 by the end of July
Traders who were asked regarding their longer-term views on gold between March 26 and April 26 expect, on average, to see the metal around 1,260 by the end of July. Generally, 59% of participants believe the price will be above 1,250 in ninety days. Alongside, 29% (+1%) of those surveyed reckon the price will trade in the range between 1,100 and 1,250 over the next three months.