- Only 52% of all positions are bearish, the lowest level in five weeks
- Downside forecasts are still on the table, but consolidation above 1,230 (20-day SMA) will improve outlook
- Growing 55-day SMA (1,211) will become a key support for gold soon
- Economic events to watch over the next 24 hours: ECB Executive Board Member Praet Speaks; ECB Vice-President Constancio Speaks; Spanish Industrial Production (Feb); ECB Executive Board Member Coeure Speaks; ECB Monetary Policy Meeting Accounts; ECB President Draghi Speaks; US Unemployment Claims (Apr 2); Fed Chair Yellen Speaks; FOMC Member George Speaks; Japanese Current Account Balance (Feb) and Trade Balance (Feb)
Gold climbed in a delayed reaction to minutes from the Fed's meeting in March showed caution in the determining US monetary policy, lowering prospects for interest-rate hikes and boosting the appeal of the metal. Fed policy makers signalled an interest-rate hike in April is unlikely, confirming market's growing anticipation that the US central bank will act cautiously until the global economy regain steam.
Fed policy makers signalled an interest-rate hike in April is unlikely, minutes of the March policy meeting showed, confirming market's growing anticipation that the US central bank will act cautiously until the global economy regains steam. US central bankers, who maintained the benchmark interest rate unchanged in March in a range of 0.25% to 0.5%, discussed the relative strength of the world's number one economy, which contrasted against persistent global headwinds. They were concerned that slowing world growth could undermine corporate investment plans and hit US exports. Fed officials expected those risks to subside only slowly. However, it was not a unanimous view. Eight of seventeen officials argued risks to the US economy were tilted to the downside, while nine said risks were balanced and none saw much likelihood that economic output would overshoot their estimates. Some officials said that the US was at or near full employment with inflation starting to climb. Only two officials wanted to raise rates at the March meeting, according to the minutes. Policy makers had signalled at the close of March meeting that they expected to hike interest rates twice in 2016 but the timing of the hikes still remains up in the air. The Fed's next meeting is April 26-27.
Bank of Japan Governor Haruhiko Kuroda reiterated the central bank's readiness to take additional monetary easing steps if needed to reach its 2% inflation goal. BoJ Governor Haruhiko Kuroda's comments come more than two months after the central bank adopted a negative interest rate strategy aimed at stemming deflationary expectations and spurring a revival in demand. Kuroda said that the BoJ would take additional easing steps in the form of quantity, quality of asset buying, or interest rates if needed. The BoJ has been conducting Qualitative and Quantitative Easing programme for three years now, but so far the scheme showed little success in boosting inflation to the 2% target level. Kuroda expected Japan's consumer inflation to hover around its current level of zero for some time before accelerating to 2%. Japan's national core CPI was flat in February, while Tokyo's CPI dropped 0.3% on an annualized basis in March, the steepest decline since QQE began. Recent economic data suggest the world's third-biggest economy is making little progress in creating the 'virtuous cycle' the BoJ hopes for, with the economy shrinking 0.3% in the December quarter, largely due to a decline in consumer demand.
Upcoming fundamentals: Yellen to speak with Bernanke, Greenspan and Volcker
Following yesterday's release of minutes of the latest FOMC meeting, Fed Chair Janet Yellen will appear publicly on Thursday. She is going to participate in a panel debate/discussion at the International House in New York at 21:30 GMT. The event is going to carry a high level of importance for all markets, given that expected debaters will include former Fed Chairmen Ben Bernanke, Alan Greenspan and Paul Volcker. In the meantime, the only March dissenter on the FOMC committee, namely Kansas City Fed President Esther George will talk on economy in Nebraska at 0:15 GMT in the night between Thursday and Friday.
Gold: outlook suggests more horizontal trading
As long as yellow metal continues to ignore a very important technical cluster at 1,224/30, we are going to maintain a mostly sideways outlook for prices. We have not seen a two-day consolidation below the weekly pivot point or above the 20-day SMA since March 22. Another mixed picture emerged for technical indicators, as daily ones are bearish and weekly studies are pointing to the North. However, quite soon the bullion is expected to meet the upward-sloping 55-day SMA (1,211), and if this line fails at provoking a rally, then downside risks will inevitably grow.Daily chart
In the 1H chart the price is now placed inside the triangle pattern with boundaries at 1,234 and 1,218. Our forecasts are biased towards the bullish camp, because a continuation triangle pattern implies an extension of an earlier uptrend (March 28-30). By sending XAU/USD beyond the upper edge of this triangle, gold should use the opportunity to soar as high as the March 30 peak at 1,244.
Hourly chart
Gap between traders is narrowing down
OANDA clients who are betting that the bullion is going to appreciate have also managed to resend their market portion beyond 60% in 24 hours through Thursday morning. Precisely, this number climbed to 62%. In the meantime, now there is a 10% positive difference between SAXO Bank's bulls and bears.