- Bullish-bearish gap is decreasing slowly, but still only 41% of positions are bullish
- 55-day SMA manages to limit bearish pressure, but a loss below here would immediately expose 1,201/98 area
- Daily indicators turned bullish on Monday
- Economic events to watch over the next 24 hours: FOMC Members Dudley, Kashkari and Rosengren Speak; RBA Meeting Minutes
Gold climbed on Monday even more as oil producers failed to agree on an output freeze, sending crude prices and equities plunging, and stoking safe-haven demand for the precious metal. At the meeting in Doha, oil producers that supply nearly half of the world's output failed to reach a deal to curb their output after Saudi Arabia appeared to deny any agreement that did not include Iran. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reported its holdings climbed 0.70% to 812.46 tonnes on Friday.
Canada's factory sales declined far more than expected in February amid a sharp decrease in shipments of motor vehicles and petroleum and coal products. The value of factory sales dropped 3.3% to 51.19 billion Canadian dollars in February from January, according to Statistics Canada. The fall reversed some of the gains over the previous three months and appeared to be steeper than the 1.5% drop economists had expected. Sales slipped in 16 of the 21 industries Statistics Canada tracks, accounting for nearly three-quarters of the manufacturing sector. Motor-vehicle sales plunged 10.5%, the first decline after four consecutive months of increases. Excluding auto-sector sales, manufacturing shipments declined 2.2% in the month. In volume terms, February factory sales decreased 2.0% compared with the previous month. The sharper-than-expected decrease could spark concerns for economists who have been calling for the non-resource side of the economy, including manufacturing, to lead Canada's economic growth in light of falling global commodity prices. Separately, Canadian home prices and sales rose in March, showing the country's housing market boom still had momentum. The housing market, a pillar of economic strength in the years since the financial crisis, was more positive, with existing-home sales up 1.5% in March.
China's economy grew by 6.7% year-on-year in the first quarter of 2016. This is the slowest pace since the depths of the global financial crisis in 2009. Growth in gross domestic product was in line with expectations, but down slightly from the 6.8% reported for the December quarter of 2015, according to the figures released by the China's National Bureau of Statistics. Despite the slight deceleration in growth, analysts suggested that the economy had a "good start" to the year, since the outlook has improved with both the manufacturing and property sectors rebounding strongly. Alongside the GDP report, the NBS also released industrial output and fixed asset investment reports. Data showed that fundamentals in March were much stronger than forecast, suggesting that growth would pick up in the next quarter. Industrial output increased by 6.8% from a year earlier, a sharp acceleration on the 5.4% pace of February, which is well ahead of anticipated increase of 5.9%. In the meantime, fixed assets investment overshot the expected growth of 10.2% and rose by 10.7%. Consequently, a solid performance by the world's second largest economy would help to improve global demand, since the increase of GDP by 6.7% means that China is contributing as much as the US in terms of global growth in the first quarter.
Upcoming fundamentals: Statistics-free day expected
There is going to be a light start given to new working week in all regions across the globe. Some action will take place in the US, marked by various speeches of Federal Reserve banks presidents. New York Fed Chief William Dudley is due to talk at 12:30 GMT, with Minneapolis and Boston Fed heads Neel Kashkari and Eric Rosengren following at 14:00 GMT and 16:30 GMT, respectively. For now it remains unknown, whether any of them are going mention monetary policy or economic outlook. Meantime, the Reserve Bank of Australia publishes its minutes from the latest meeting at 1:30 GMT in the early morning hours of Tuesday. Analysts suspect the RBA will underline global economic uncertainty and low inflation, but will stress the financial conditions are getting better and rising commodity prices are a positive factor for Australia.
55-day SMA acts as major support for gold
Price lows of April 14-15 were touching the 55-day SMA, but the bears were far from being successful to close XAU/USD below this vital support line. On Friday gold commenced a recovery up to 1,234 and the rally continues taking place on the April 18 morning. We see short-term gains being contained by the 1,239/41 area where both weekly and monthly pivots rest at the moment. Nonetheless, medium-term risks remains skewed to the upside because of the upward-sloping 55-day SMA. Bullish case is also indicated by the daily and weekly technical indicators.Daily chart
The 200-hour SMA is preventing the bullion from advancing beyond 1,239 today. However, the spot is getting closer to a violation of this resistance, which will later refocus the attention back to the April 12 high of 1,262.67. Alongside, the April 1-14 uptrend will create demand for gold, at least over the next 24 hours of trading.
Hourly chart
Market sentiment gets healthier for a fourth consecutive day
Moreover, the bulls of OANDA and SAXO Bank markets have also received a boost throughout the past 72 hours. OANDA's long share is just slightly falling short of the 63% level, while more than 56% of all SAXO Bank market players are now expecting to see the bullion on the topside.