Markets Surprised by Positive Data coming from US
Bullion.Directory precious metals analysis 4 May, 2015
By Harley Salt
Co-founder, Director of Sales Trading at Bullion Index
Gold ended last week on a flat note having fallen below US$1,180/oz with better than expected jobless data out of the US pushing gold lower. It was a surprise to the markets to finally see positive data from the US, of late the majority of key data has been coming in below expectations.
With one positive bit of data the market seemed to grab this and give hope to a near term rate rise which kept gold demand weak. We still do not believe the Fed will move on rates this year given the overall weakness in the US economy and the continuing flow of poor economic data.
This week could be another volatile week for gold with a number of key economic releases due out that will no doubt influence the price of gold.
Monday sees HSBC China Manufacturing PMI data and Australian Building Approvals.
Tuesday we have the RBA monetary policy meeting. We believe the RBA will cut its cash rate by 25bps at this meeting. They may also talk down the Aussie dollar, if they do expect the AUD to weaken and the price of gold in AUD to jump higher. Also out on Tuesday is the Australian Trade Balance and UK Construction PMI.
Wednesday will see the releases of US Trade Balance data for March with the deficit expected to widen. Retail Sales data is also due out for Australia and the EU.
Thursday is the UK general election with BBC reporting that is it the most unpredictable election ever. The ADP Employment Report is due out, that will give investors some guidance on the US non-farm payroll data out the next day. Australian Employment Data is also due out as are US jobless claims.
Friday is a busy day for data with Trade Balance data from China, Germany and the UK due to be released, along with the Canadian Unemployment rate. The most important data for the week, the US non-farm payroll data will also be released. The US non-farm payrolls are expected to come in better than the previous month which was very disappointing, unemployment is expected to drop from 5.5% to 5.4%. Any weakness in the non-farm payroll data will see gold demand increase.
It should be another interesting week across precious metals markets, I expect to see gold test the US$1,191/oz resistance level this week, while if gold breaks below US$1,173/oz then we may not see support come in until US$1,150/oz.
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