- 60% of all SWFX positions are short
- Bullish/bearish risks are evenly divided, with both major supply and demand areas surrounding the spot today
- Daily technical indicators continue indicating sideways
- Economic events to watch over the next 24 hours: ECB Vice-President Constancio Speaks twice; US Durable Goods Orders (Mar), Services PMI (Apr) and Consumer Confidence (Apr); Bank of Canada Governor Poloz Speaks; New Zealand Trade Balance; Australian CPI (Q1)
Gold extended gains into Tuesday amid a weaker US Dollar and equities, as investors remain cautious ahead of policy meeting of the Fed and Bank of Japan later in the week. While the Fed is not expected to hike interest rates at the meeting, market participants will be looking at the US central bank's assessment of the global economy and its monetary policy outlook. Meanwhile, it remains highly uncertain whether the BoJ will actually deliver fresh stimulus this week. Assets in SPDR Gold Trust, the largest gold-backed exchange-traded fund, slid 0.3% to 802.65 tonnes on Monday, though remained not too far off a two-year high hit earlier this year.
New US single-family home sales unexpectedly fell in March, but the decline was mainly concentrated in the West region, implying that the housing market continued to strengthen. According to the Commerce Department, sales of newly built homes in the US unexpectedly dropped 1.5% to 511,000 on an annual pace, reaching a three-month low despite better supplies as well as lower prices. Meanwhile, economists had expected a rise of 1.6% to an annualised pace of 520,000 homes. Despite a considerable slide in new construction in March, the positive tendency still could be observed, since the data is 14% higher compared to the preceding year, signalling a continued strength of the US economy. March's sales pace put the market on track to overshoot 2015's total 501,000 new homes, the highest annual level since 2007. The report also showed inventory expanded to its highest level since September. Based on the current sales pace, it would take 5.8 months to exhaust the supply of newly built homes, compared with 5.6 months in the previous month. The total number of new homes for sale at the end of the month was 246,000, the highest figure since September 2009. Meanwhile, the median price of a newly built home plunged to $288,000 from $297,400 in February. That was down 1.8% from a year earlier.
Canada's annual inflation rate slowed in March as lower gasoline prices offset increases in food and shelter costs, while a robust data on retail sales offered a positive sign for first-quarter economic growth. Canada's all-items consumer-price index advanced 1.3% from a year earlier, Statistics Canada said. The March annual core-inflation rate, which strips out volatile components such as some food and energy prices, surged 2.1%. That followed a 1.9% advance the previous month and was ahead of the 1.7% expectations. Measured on a monthly basis, the consumer-price index climbed 0.6%, the highest in almost a year, while core inflation rose 0.7%, compared with the 0.4% forecast. Prices for food jumped 3.6% on an annual basis, following a 3.9% gain the previous month. Prices for food purchased from stores increased 4.0% compared with the same month last year, while prices for shelter rose 1.1%. Offsetting the gains were a 1.0% annual drop in Statistics Canada's transportation index, which includes gasoline. Clothing and footwear prices slid 0.4%. Canadian retail sales had a surprise gain in February with strength in most categories led by motor vehicle dealers. Sales increased 0.4% to C$44.2 billion, Statistics Canada reported. Motor vehicle and parts sales rose 1% to C$11.5 billion on the month, and have soared 15.3% over the last 12 months.
Upcoming fundamentals: Q1 Australian inflation estimated at 0.3%
There are important releases of fundamental data expected from the US and South Pacific countries over the next 24 hours. American orders for durable goods are seen recovering in March after deep losses in the preceding month, while the CB Consumer Confidence Index is due at 14:00 GMT. At 22:45 GMT New Zealand will deliver figures on international trade in March as exports are projected to increase more than imports, which is thereby going to push up the trade surplus in the reported month. Meantime, analysts are closely monitoring the upcoming Australian CPI numbers. They estimate that a quarterly increase in consumer prices will be the slowest in a year in January-March 2016. With quarter-on-quarter rise in inflation of 0.3%, annual inflation is expected to tick up to the 1.8% mark in Q1 from 1.7% in Q4 2015. However, this reading will continue falling short of the Reserve Bank of Australia's key target region for inflation of 2-3%.
Gold raises probability of recovery
Yellow metal acted decisively on Monday and provided the price with a robust enough increase, in order to close back above the vital 55-day SMA. Therefore, for now the bearish case became a temporarily solved issue. XAU/USD should be additionally backed by the March-April uptrend near 1,233.40, but any closure under here is going to expose the weekly S1/Bollinger band at 1,216. We are not ruling out a sell off as gold will be pressed down by the primary resistance - the monthly and weekly pivot points at 1,241/43.Daily chart
Gold is challenged by the 200-hour SMA from the upside, while an earlier April uptrend at 1,236 is offering help to the bulls. Such indecisiveness in the 1H chart is clearly demonstrated by the daily technical indicators as they are giving broadly neutral signals today. By tackling the moving average successfully, we see the April 20 peak (1,257.92) as the next formidable resistance. At the same time, the most immediate bearish aim is the Friday low at 1,227.34.
Hourly chart
6/10 of all positions are short on Tuesday
OANDA's long clients consolidated above the 60% mark by Tuesday morning. Moreover, SAXO Bank market participants continue to be bullish on the bullion for two days in a row, albeit a moderate narrowing of the difference between the longs and shorts. Now the former are dealing with 51.7% of all trades, leaving the bears with 48.3%.