Gold dropped to trade near the lowest level in more than three weeks on Tuesday, as the precious metal remained under pressure amid expectations that the Fed will hike interest rates as soon as next month. The Fed's officials are scheduled to speak this week and are expected to support the case for a rate hike within months. Meanwhile, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, climbed 0.38% to 872.52 tonnes on Monday.
The Reserve Bank of Australia's outgoing Governor Glenn Stevens defended the central bank's inflation target amid calls from some economists to сut the interest rate amid persistently low inflation around the globe. The Governor said that impossible to control inflation in the "very short-term and you shouldn't try." Australia's annual inflation rate has remained below 2% since the third quarter of 2014. Australia's weak inflation outlook underscores the challenge facing Stevens's successor, his current deputy Philip Lowe. Stevens is due to step down on September 17. The Governor added that inflation was currently a "bit too low" but voiced confidence it would return to the 2%-3% range in the medium-term. Beyond weaker-than-expected inflation numbers Stevens said the economy was performing reasonably, but admitted growth was not progressing at the desired rate. The head of the central bank also highlighted a cooling of the housing market, although the RBA remained vigilant given the risks of low interest rates. The RBA made its first move on the OCR in a year at its most recent board meeting on May 3, sending the cash rate to a record low of 1.75% despite prior concerns over the potential to further stimulate the housing market. Analysts expect at least one more rate cut this year, with that move potentially coming during Stevens' term as futures pricing points to a near 50-50 chance of an August cut.
US home resales continued to rise, increasing more than expected in April, as housing demand strengthens alongside gradual job growth and ultra-low interest rates. Sales surged 1.7% in April from the previous month to a seasonally adjusted annual rate of 5.45 million, the National Association of Realtors reported. Economists had predicted sales would climb 1.3% to a rate of 5.40 million in April. Sales soared 6.0% from a year ago. Nevertheless, there were regional variations. While sales of existing homes surged in the Midwest by 12.1% last month and also increased in the Northeast, the South and West declined. Thus, affordability remains a key issue. The national median sale price for a previously owned home last month stood at $232,500, up 6.3% from a year earlier, marking the 50th consecutive month of year-over-year gains. Prices are rising at a far faster rate than most workers' wages, average weekly earnings adjusted for inflation climbed just 1.3% in April from April last year. Also, the NAR said there were 2.14 million existing homes available for sale at the end of April, up 9.2% from March as sellers put their homes on the market for the spring selling season. However, compared with April a year ago, inventory declined 3.6%. That is a 4.7-month supply at the current sales pace.
Upcoming fundamentals: US new home sales to add 2% in April
Gold closes under 55-day SMA, outlook slips
Over four trading days through Monday of this week the precious metal has fallen by about 2.5% of its value and the sell-off continues to take place today. By closing below the major 55-day SMA, currently at 1,249.52, gold puts its near-term outlook at a substantial negative risk. We see the closest demand reaching the metal as low as 1,235.20 where the monthly S1 lies for the moment. To meet this support, however, gold will have to accept additional 1.1% of losses from Tuesday's open price. Despite that, daily technical indicators suspect there is a roughly equal probability of both gains and losses today.Bullish market portion continues to improve
Spreads (avg,pip) / Trading volume / Volatility
Market participants foresee the price of gold at 1,300 by the end of August
Traders who were asked regarding their longer-term views on gold between April 24 and May 24 expect, on average, to see the metal around 1,300 by the end of August. Generally, 61% (+1%) of participants believe the price will be generally 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.