- Traders fixed profit on yesterday's trade and sent the bullish share back below 40%
- Future outlook to stay dampened, unless there is a surge beyond weekly R1/March 23 high at 1,247
- More than a half of all daily technical indicators are neutral today
- Economic events to watch over the next 24 hours: Swiss KOF Leading Indicator (Mar); German CPI (Mar); US ADP Employment Change (Mar) and Crude Oil Inventories (Mar 25); FOMC Member Evans Speaks
Gold traded higher on Wednesday following a 1.7% gain in the prior trading session, supported by a weaker US Dollar and Fed Chair Janet Yellen's comments that the US central bank should be cautious in hiking interest rates. 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. However, 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. In the meantime, assets in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, declined 0.40% to 820.47 tonnes on Tuesday, the first drop in two weeks.
Fed Chair Janet 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. In her comments, Yellen said inflation has not yet proven durable against the backdrop of still low oil prices and concerns over China. However, 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. Fed policy makers kept interest rates on hold at their March 15-16 meeting and sharply reduced their projected path of interest rate increases this year, foreseeing a total rise of half a percentage point, down from the full percentage point hike they expected in December. Meanwhile, US consumer confidence recovered in March, as Americans turned positive about the short-term outlook for the US economy. The Conference Board's index of consumer confidence climbed to 96.2 in March from an upwardly revised 94.0 in the prior month. ADP private payrolls report later in the sessions is expected to show that 200,000 positions were added in March, compared with the 205,000 projected for the government's nonfarm payrolls Friday.
New orders for long-lasting US manufactured goods dropped in February for the third time in four months, as the sector continued to struggle with the lingering effects of a strong US Dollar and lower oil prices. Bookings for goods meant to last at least three years plunged 2.8%, following the 4.2% gain, the Commerce Department reported. Categories reflecting business investment were broadly sluggish, indicating that American companies remain cautious about spending. New orders for nondefense capital goods excluding aircraft, a proxy for business spending on equipment, dropped 1.8% in February after a 3.1% increase in January. Meanwhile, a separate report of the Labor Department showed the number of Americans applying for unemployment benefits climbed modestly last week, while revisions for prior weeks indicated the labour market was much stronger than previously estimated. Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 265,000 for the week ended March 19. The prior week's claims were revised to show 6,000 fewer applications received than previously reported. The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, nudged up 250 to 259,750 last week.
Upcoming fundamentals: US economy to continue adding jobs, despite turmoil
Today we are going to have a first insight into US employment statistics, as the ADP report will be available at 12:15 GMT. Today's number is likely to become a subject to a revision later in April, as the month has not come to an end yet. Nonetheless, economists foresee that the ADP will report on 195,000 new jobs generated in the US in March, down from 214,000 in February. This private survey of employers is normally is good trend predictor for the Labor Department's official numbers due on Friday, but it is usually unable to precisely predict the final result.
Gold price soars beyond resistance at 1,227/34
Along with tumbling US currency, the bullion skyrocketed the most in two weeks yesterday. Prices pierced through the immediate resistance area of 1,227/34 and encountered the Feb-Mar uptrend line at 1,240. We would allow for a short-term selloff today as a part of post-growth correction lower. Outlook for the future remains depressed, as the rebound looks unsustainable. A spike above the first weekly resistance and March 23 high (1,247) should improve expectations, but daily technical studies generally think that the best option to choose on Wednesday is the wait-and-see mode.Daily chart
Continuous gains are not guaranteed, judging from the one-hour chart. Even though the yellow metal appreciated beyond the 200-hour SMA at 1,233, the mid-March downtrend line remains inviolate. Success here would reopen the March 22 peak at 1,260 and the March 17 high at 1,271. The bears are having almost equal chances to take the lead over the market, but their medium-term ambitions will meet an increased demand between 1,211 and 1,201 where several local minimums lie at the moment.
Hourly chart
Long positions fix profit, sending bullish share down
Notwithstanding the aforementioned advance in gold prices, OANDA clients are resilient to those changes. It is proved by the fact that the bullish (59%) advantage over the bears (41%) there is largely unchanged on a daily basis. Alongside, SAXO Bank traders are much more undecided on the matter of future price developments, as there we see only a small majority among the bullish camp (52% vs 48%).