Gold Snaps Losing Streak

Daily Analysis - 28/04/2017

Precious Metal Reverses From 2-Week Low


Gold eked out marginal gains on Thursday to snap a three-day slide and is trading modestly higher on Friday after a report showed US weekly jobless claims climbing to a one month peak. Bullion hit a two-week low on Wednesday amid a decline in safe-haven interest following the perception that geopolitical conditions had eased moderately.

Trump Comes to Gold’s Rescue

Prices of the precious metal are holding firm above the psychologically important 200-day moving average at $1260 after buyers entered expecting a fresh spike in geopolitical tensions.

US President Donald Trump last night questioned the viability of an existing free trade agreement with South Korea, and asked Saudi Arabia to pay more for US military protection.

Gold slumped from a five-month high in mid-April amid investor hopes that Trump’s tax reforms would boost the dollar. Chartists view $1270 as the key level to watch out for. A close above that zone should change the short-term trend to upward.

On the downside, $1250 per troy ounce holds the key, with any dip below potentially signalling a resumption of the downtrend.

Gold is trending within a narrow range around $1265 an ounce in early trade on Friday.


UK Consumer Confidence Reaches 4-Month Low

Consumer confidence in the UK fell to a four-month low in April, providing the latest sign of weakness in the shopper-driven economy ahead of the general election in June.

Market research agency GfK's monthly gauge of consumer morale slid to -7 from -6 in March. The reading was in-line with the median forecast of economists surveyed by Reuters. Consumer confidence has been flagging as the sudden spurt in inflation eats into disposable incomes in spite of the gradual improvement in wages.

However, analysts reckon the figure continues to remain robust by historical standards, with GfK noting that it had not yet seen any evidence of a major downturn in sentiment.

GBPUSD has been gaining in Friday morning trade, with the pair sitting just below the strong resistance around 1.2910.


German Inflation Accelerates in April

Data from the Federal Statistics Office on Thursday showed that consumer prices in Europe’s largest economy rebounded in April following an Easter-holiday related drop during the previous month.

German consumer price growth accelerated to 2.00% from 1.50% in March, printing just modestly above the consensus forecast of a 1.90% increase. The inflation rate for the aggregate Euro Area is due for release later in the session, with a pickup anticipated in the headline figure.

Economists polled by Reuters expect the figure to have risen to 1.80% in April from 1.50% in March. European Central Bank President Mario Draghi has so far argued that the recent pick-up in inflation has been primarily driven by volatile components like oil and food, with underlying price pressures continuing to remain subdued.

After reaching a new record earlier in the week, DAX futures are currently consolidating around 12440.


New Zealand Trade Surplus Widens

Data compiled by Statistics New Zealand released overnight showed that the country’s trade balance widened in March to a surplus of NZD 332 million (US$179 million) compared to a $189 million surplus a year earlier.

The country had posted a slight deficit of NZD $50 million in February. Through March, exports jumped 11.00% from the same period last year to NZD 4.65 billion, hitting the highest monthly level since 2015.

Dairy and lamb exports to China, New Zealand's largest market, boosted the overall value, with the gain in dairy products accounting for over half of the total increase in exports.

Meanwhile, imports rose by 7.60% to NZD 4.30 billion, led by a rise in demand for foreign cars.

NZDUSD rallied in early Friday trade, but failed to hold on to the highs and was last seen around 0.6875.


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