Gold rose for a third consecutive session on Wednesday amid a weaker US Dollar and soft US economic data. However, the precious metal traded in a tight range as investors awaited the Fed's policy decision later in the day. The US central bank is likely to keep interest rates on hole, while the focus rests on the tone of the Fed's statement and timing for a further rate hike. Meanwhile, official data showed orders to US factories for long-lasting manufactured goods increased less than expected in March, while a key category that tracks business investment plans remained weak for a second month.
Orders to US factories for long-lasting manufactured goods increased less than expected in March, while a key category that tracks business investment plans remained weak for a second month. The Commerce Department reported orders for durable goods, items meant to last three years or more, climbed 0.8% last month following a downwardly revised 3.1% decrease in February. Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, were unchanged after a downwardly revised 2.7% decline in the prior month. Manufacturing, which makes up 12% of the US economy, is faltering due to the lingering effects of the Dollar's past strength and weak overseas demand. Prospects for 2016 remain uncertain. Some economists believe that factories should see an increase in demand since the Greenback has stopped rising versus other currencies. The global economy also seems to have stabilized after a shaky start to the year. However, other analysts are uncertain about how long it might take for manufacturing to rebound. Meanwhile, the mood among American shoppers surprisingly fell in April. The Conference Board's measure dropped to 94.2 in April from a downwardly revised 96.1 in March. The present-situation index advanced to 116.4 in April from 114.9 a month earlier, while the expectations index declined to 79.3 from 83.6.
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.
Upcoming fundamentals: It is all about Fed. Is it?
Gold erases earlier losses with eyes on Fed
By the end of Tuesday the volume of trading has risen to a three-day peak, which supported the bulls in attacking the nearest resistance at 1,241/43. By creating the long lower shadow, gold closed near the upper bound of the mentioned supply where the weekly pivot is resting at the moment. Additionally backed by the 55-day SMA at 1,236.91 and March-April uptrend at 1,235, the bullion has accumulated a well-positioned upside potential. With strong enough momentum the base scenario would allow for an advance up to the next resistance zone created by the weekly R1, Bollinger band and February peak at 1,258/63.58% of the SWFX market is gold-short
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 27 and April 27 expect, on average, to see the metal around 1,260 by the end of July. Generally, 60% (+1%) of participants believe the price will be above 1,250 in ninety days. Alongside, 28% (-1%) of those surveyed reckon the price will trade in the range between 1,100 and 1,250 over the next three months.