The gold price corrected to the $1,975 zone as the Dollar index moved higher earlier, before bouncing on a weak non-manufacturing report from the Philly Fed that showed a marked decline to -22.8 against -12.8 last time and March US housing permits being revised higher to 1.430 million from 1.413 million. Bullion has gradually trended lower, after hitting a 13-month high of $2,040 on April 13, but has been trading in a relatively narrow range in recent days, as markets wait for key central bank decisions next week.
As for today, the $2,000 level was tested earlier, only to be rejected and yesterday’s low at $1974, Friday’s low at $1971.50 and last week’s low at $1969.40 now all coming into play. The 21-hr EMA sits at $1988, today’s key pivot area, before the key $2000. With markets more focused perhaps on the Earnings Season with big hitters Microsoft and Google parent Alphabet reporting tonight and expectations of more rate hike bets, the appeal of the precious metal has been capped for now. It was a cooling in yields & the USD and talk of sticky inflation lifted the precious metal to the April high, that momentum has eased as the yield curve continues flatten with the 2/10 year inversion below 60 bp.
The outlook for the rest of today’s US data could help lift GOLD later as CB Consumer Confidence, is expected to decline to 104.00 from 104.2, New Home Sales are also expected to cool to 633k from 640k and finally the often volatile Richmond Manufacturing Index is expected to decline to -8 in April from the relatively strong -5 in March and the 3-year low –16 in February.
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Stuart Cowell
Head Market Analyst
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