Gold was set to record its biggest weekly drop in six weeks on Friday as the US Dollar strengthened ahead of the US non-farm payrolls report. A strong payrolls data could encourage the Fed to hike interest rates sooner than later, hurting non-interest paying gold. For the week, the precious metal was set for a 1.2% decline, its biggest weekly drop since the week ended March 25. Meanwhile, investor sentiment toward gold appeared to be bullish with assets of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, climbing to 829.44 tonnes on Thursday to the highest in over two years.
Canada's building permits declined in March due to fewer planned projects in western Alberta, particularly within the commercial sector. According to Statistics Canada, the value of building permits issued by municipalities in March plunged 7% to $6.9 billion. The drop followed a revised 15.3% surge in February. The data was worse than the 4.4% decrease predicted by economists. The value of permits issued in Alberta, dramatically hit by a plunge in crude prices, dived by 41.3%. This followed a 43.3% surge in February on the back of a big commercial project in the city of Edmonton. 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. 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%. 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.
The Reserve Bank of Australia revised sharply downwards its inflation forecasts after slashing interest rates just days earlier due to weak first-quarter inflation data. Nevertheless, the central bank said that the Australian Dollar's sharp depreciation over the last few years is expected to continue to put upward pressure on prices. The central bank cut the official cash rate by 25 basis points to 1.75%, after keeping rates on hold for a year. The decision came after the Australian Bureau of Statistics released quarterly CPI data, showing headline inflation plunged from 1.7% in the final quarter of 2015 to 1.3% last quarter. Australia's weak inflation environment could see the RBA taking interest rates even lower if the central bank's weak underlying CPI outlook materializes. The RBA downgraded its inflation forecasts, from expecting underlying inflation to remain within the target range, albeit at the lower end until the fourth quarter of 2016, to now anticipating 1-2% underlying CPI inflation for the year ending December 2016, and 1.5-2.5% inflation for the rest of the forecast period. While the RBA's inflation forecasts were significantly lower than the previous estimated, the bank's economic growth outlook was largely unchanged. In the short term, the RBA predicts slightly stronger growth of around 3%, but left its longer-term GDP forecasts intact at 2.5-3.5%.
Upcoming fundamentals: US and Canadian employment data for April
Gold: second attempt to cross weekly PP fails
For a second day in a row on Thursday the yellow metal was unable to overcome the closest support line represented by the weekly pivot point at 1,272.92. This is going to raise doubts about the actual strength of the bearish camp. Along with positive daily and weekly technical signals, we are looking for a minor rebound on the last day of this working week, also because the weekly PP is immediately backed by the monthly pivot, which is unlikely to let the bears succeed. The 2015 high at 1,307.06 seems out of reach for the moment, and firstly gold should attack the yesterday's peak at 1,286.42.SWFX bulls are up to 32%
Spreads (avg,pip) / Trading volume / Volatility
Market participants foresee the price of gold at 1,275 by the end of August
Traders who were asked regarding their longer-term views on gold between April 6 and May 6 expect, on average, to see the metal around 1,275 by the end of August. Generally, 64% (+3%) of participants believe the price will be above 1,250 in ninety days. Alongside, 27% (-1%) of those surveyed reckon the price will trade in the range between 1,100 and 1,250 over the next three months.