Gold traded flat on Thursday as the US Dollar lost 2% versus the Japanese Yen after the Bank of Japan stunned markets by staying pat on its monetary policy. The BoJ Governor Haruhiko Kuroda and his colleagues opted to take more time to assess the impact of negative interest rates. Meanwhile, the Fed opted not to hike interest rates and remained ambiguous about raising rates in June amid moribund economy and weakening consumer spending. Market participants will be watching closely US GDP data due later in the session.
The Fed opted not to hike interest rates and remained ambiguous about raising rates in June amid moribund economy and weakening consumer spending. The US central bank proceeded with its plan to move cautiously on raising the benchmark federal-funds rate, which has been between 0.25% and 0.50% since December, when the Fed increased short-term rates after keeping them near zero since 2008. Policy makers pointed that the US economy is performing robustly in some respects, but continuing to falter in others. Household spending has diminished even though real income has increased and consumer sentiment remains high, while the labour market conditions have improved further. The Fed's caution underlines how policy makers still lack confidence they can move away from extraordinary easy-money policies without derailing the fragile US growth and knocking the global economy off balance. The seven weeks until the June meeting could help determine how many times, if any, the Fed will hike short-term interest rates this year. Policy makers will get two months of inflation and labour-market data as well as two estimates of first-quarter growth before their next meeting. One major source of uncertainty for policy makers is the UK's referendum over whether to leave the EU, which is scheduled for June 23, a week after the Fed meets.
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.
Upcoming fundamentals: US economy to expand just 0.6% in Q1
Gold continues to appreciate gradually
The precious metal has finally dealt with the closest resistance cluster represented by the monthly and weekly pivot points at 1,241/43. Now the doors are open for extension of the rally up until the following supply at 1,258/63. There the bullion is going to face the weekly R1, which is backed by the upper Bollinger band and February high. In spite of strongly positive daily and weekly technical indicators, gold may turn bearish near that important zone and commence a correction lower. Nevertheless, deep sell-offs are not a part of the short-term scenario amid a formidable support sector around 1,243/36.58% of SWFX traders are gold-short
Spreads (avg,pip) / Trading volume / Volatility
Market participants foresee the price of gold at 1,275 by the end of July
Traders who were asked regarding their longer-term views on gold between March 28 and April 28 expect, on average, to see the metal around 1,275 (+15) by the end of July. Generally, 64% (+4%) 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.