- Sentiment is pessimistic in 60% of all cases
- In current volatile environment, prices are set to ignore the nearest resistance area at 1,233/27
- Five daily technical indicators are neutral today, three others recommend selling gold
- Economic events to watch over the next 24 hours: German Retail Sales (Feb) and Unemployment Change (Mar); Spanish Retail Sales (Feb); Euro zone CPI (Mar); US Unemployment Claims (Mar 26) and Chicago PMI (Mar); FOMC Members Dudley and Evans Speak; Bank of England Governor Carney Speaks; UK Final GDP (Q4); Canadian GDP (Jan); Japanese Tankan Business Conditions Index (Q1); Chinese Manufacturing PMI (Mar)
Gold rose on Thursday, supported by a weak US Dollar and Fed Janet Yellen remarks on cautious approach to interest rate hikes this year, and was also set to record its best quarter in almost 30 years. The precious metal has advanced 15.6% in the first quarter of the year, the strongest such performance since the third quarter of 1986. Assets in SPDR Gold Trust, the world's top gold-backed exchange-traded fund, declined for a second consecutive session to 819.28 tonnes on Wednesday. Holdings are still near their highest in over two years.
US private companies continue to create new positions, with 200,000 jobs added this month, according to payrolls processor ADP and Moody's Analytics. Economists had expected the ADP National Employment Report to show a gain of 194,000 jobs. However, private payrolls in February were revised down to 205,000 from an initially reported 214,000 surge. The services sector was the biggest contributor to the employment gain, creating 191,000 jobs. The figure, however, represented a decline form 204,000 in February. Increasing employment levels allow US households to spend more lavishly, thereby bolstering economic activity and shielding the world's biggest economy against external headwinds. The report release comes two days prior to a more comprehensive non-farm payrolls report from the Labor Department. Economists anticipate the report to show growth of 200,000 jobs, with the unemployment rate remaining steady at 4.9%. In a speech earlier in the week, Fed Chair Janet Yellen noted that improvement in the labour market over the past two years exceeded all expectations. Nevertheless, Yellen insisted on a slower path and more cautious approach to interest rate hikes amid global economic and financial uncertainties, which pose risks to the world's number one economy. Yet Yellen expected headwinds from slowdown abroad, low oil prices and uncertainty over China to wane and allow the US economy to continue recovering and justify gradual series of rate hikes.
Business confidence in New Zealand continued to decline in March, particularly in the agricultural sector. ANZ Bank's business survey showed a net 3% of companies are positive about the prospects for the nation's economy over the coming year, compared with a net 7% in the preceding survey. Optimism remains high in the construction sector amid low interest rates and Auckland's housing shortage, while the services sector is also upbeat. However, the mood in the agricultural sector continued to darken, with a net 46% of firms anticipating conditions to deteriorate, reflecting the impact of lower dairy prices. While companies were concerned about the New Zealand economy, optimism about their own prospects rose, from a net 26% to 29%, and a net 13% expect bigger profitability in the coming year, compared to 12%. Firms reduced their export expectations to a net 21% from 23% in February. ANZ's composite growth indicator, which combines its business and consumer confidence reports, indicates the economy will grow between 2.5% and 3.5%. At the same time, Treasury forecasts growth averaging around 2.7% a year over the next five years. While the uncertain global outlook remains a concern, Treasury secretary Gabriel Makhlouf said the domestic economy was strong, supported by record visitor and migrant arrivals and low interest rates.
Upcoming fundamentals: UK and Canadian GDP, Chinese manufacturing activity
For precious metals' traders the most important part of Thursday will be closely linked to America and China. Chicago PMI will be out at 14:45 GMT, followed by speeches of two Federal Reserve Bank presidents, William Dudley of New York and Charles Evans of Chicago. In the meantime, Canada's economic growth numbers for January are up at 12:30 GMT, where the market estimates a 0.3% monthly expansion and 1% annual surge in GDP. Tomorrow early morning, on the first day of April, China will be the first country to release its official and Caixin figures about activity in manufacturing sector of the economy. Given uncertainty about slowing long-term GDP growth, this particular industry has been in a decline for a prolonged period of time. The PMI reading is forecasted to increase only marginally to 49.3 points in March from 49.0 a month before.
Gold undecided near technical cluster at 1,227/33
Prices of the yellow metal are increasingly turbulent this week, as the volume of daily trading has not rebounded to pre-Easter levels yet. Gold failed at the two-month uptrend (1,242.50) yesterday and slid back below the cluster of important levels located between 1,233 and 1,227. Ability to hover below the lower bound of this technical bunch will fuel a new round of bearish concerns. The bears keep focused on the 1,200 area (weekly S1/Bollinger band/55-day SMA), and this downward idea is backed by aggregate technical indicators today.Daily chart
As expected yesterday, gold prices were unable to hold to Tuesday's gains. A cap was provided by the mid-March downtrend near 1,237. Now the spot is already below the 200-hour SMA (1,229), meaning all attention to switched back to the Feb 26 low at 1,211.
Hourly chart
Sentiment remains depressed despite price correction
In the meantime, changes of sentiment in both OANDA and SAXO Bank markets are quite negligible. The former's clients preserve a bullish bias in somewhat about 59% of all cases for a second consecutive trading day. On top of that, the positive gap between two types of SAXO Bank traders expanded to seven percent, while 24 hours ago the difference amounted to only two pp.