Gold stabilized following two days of losses on Friday, but was set for its biggest weekly decline in eight weeks amid a stronger US Dollar and indications from the Fed that it could hike interest rates as soon as next month. The number of people seeking US jobless aid plunged from a 14-month high during the last week. US initial applications for state unemployment benefits dropped 16,000 to a seasonally adjusted 278,000 for the week ended May 14. Holding in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund climbed 0.52% to 860.34 tonnes on Thursday.
Canadian wholesale sales declined for a second consecutive month in March, led by lower motor vehicle and food sales. According to Statistics Canada, the value of Canadian wholesale trade dropped by 1.0% in March to a seasonally adjusted 54.56 billion Canadian dollars, compared to economists' expectations for a 0.5% fall. Lower sales were recorded in five of seven subsectors, making up for 65% of total wholesale trade. In volume terms, sales fell by 0.4%. The motor vehicles and parts subsector slipped by 2.5% to C$10.28 billion, its lowest level in four months as vehicle sales fell. Moreover, Statistics Canada revised February's month-on-month decline to 2.3% from an initial 2.2%. While wholesale data often get less attention than other economic measures, wholesalers make up the biggest portion of the Canada's services sector, which in turn accounts for around two-thirds of overall economic output. The Canadian GDP outlook remains fairly bleak for March, especially in light of several discouraging macro-data published earlier. Statistics Canada showed that manufacturing sales tumbled 0.9% to C$50 billion amid weakness in the transportation equipment and primary metals industries. The March GDP figure, which is due at the end of May, will be accompanied by the quarterly economic growth statistics. Thus far, February's GDP proved to be weak, contracting 0.1% after a jump of 0.6% in January.
Japan's core machinery orders increased more than expected in March but firms predict orders to drop in the current quarter as companies become increasingly cautious due to a surging Japanese Yen and weakness in overseas economies. Core orders, a leading indicator of business investment, surged 5.5% from the previous month, stronger than a 0.7% increase expected by economists. On a an annual basis, core orders surged 3.2%. For the quarter, core orders gained 6.7% in the three months to March from the previous quarter, but are predicted to decline 3.5% in the April-June period. The projected fall in machinery orders in the second quarter comes amid concerns that the appetite for investment will wane due to the likelihood of slower global growth. Business investment has been moderately improving in the past few years but is yet to return to levels seen prior to the global financial crisis despite efforts by Prime Minister Shinzo Abe to urge firms to spend more for future growth. Policy makers are relying on an increase in capital expenditure to boost gains in productivity, create new jobs and increase wages. Gross domestic product data for the first quarter showed household spending lacked strength and capital expenditure declined, a worrying sign that domestic demand could falter.
Upcoming fundamentals: Canadian inflation to surge in May
Gold resisted by 55-day SMA from below
Gold prices continued to diminish on Thursday, as the weekly S1 at 1,257.01 was successfully confirmed. However, when the bullion reached the 55-day SMA and attempted to breach this line, it was immediately rejected and sent back to the upside. The session closed with a decent bullish comeback. Nevertheless, the short-term outlook is negative, while a drop below the mentioned moving average will only strengthen the bearish case and will reset eye on the 100-day SMA/March low at 1,209/07. However, fresh weekly technical signals suggest gold is oversold and the purchases should resume.Bullish market portion at 13-day high
Spreads (avg,pip) / Trading volume / Volatility
Market participants foresee the price of gold at 1,280 by the end of August
Traders who were asked regarding their longer-term views on gold between April 20 and May 20 expect, on average, to see the metal around 1,280 by the end of August. Generally, 57% (+2%) of participants believe the price will be above 1,250 in ninety days. Alongside, 30% (-1%) of those surveyed reckon the price will trade in the range between 1,100 and 1,250 over the next three months.