14 April 2012 currency strategist 04: 21 GMT fundamental forecasts for gold: Rally
Price of gold closed more than more than 1.0% this week as the dollar came under pressure on calls renewed for more fed with ease. Concerns about the sluggish growth in the labour market, invited by disappointing NFP week last printing, coupled with lower that the expected data from China stoked fears of a global economic slowdown with additional calls quantitative easing supporting demand for gold in a store of wealth. However, the advance is likely to be short lived as the overall structure of the broader decline in gold remains bearish.
Chinese data made headlines in the week from the CPI in March of printing that came in above expectations at 3.6% y/y. Although concerns about a landing in China have circulated for a while, investors took comfort in the fact that she had room to ease economic conditions should warrant. However with prices from 3.2% growth y/y to 3.6% y/y, the Central Bank has limited scope to ease inflationary pressures take root. Balance of trade data a day later temporarily eased concerns that topped expectations test, showing a surplus of $5 35 b from a deficit planned $ 3. 15 (b). However, by looking at data showed a decline dramatic imports coming only 5.3% y/y, down a previous copy of 39.6% y/y, then as growth in the expectations of exports overcome 8.9% y/y. The week culminated with the GDP data on Friday that missed expectations with a circulation of only 8.1% y/y. While the consensus estimates had called for a reading of 8.4%, whispers forecasts just one day before you print it distributed that data can come as high as 9%. It goes without saying that printing weighed heavily on the sense of wider market with the greenback, recover losses the week almost all investors risk artists active safety perceived the reserve currency.
As a major buyer of gold, look for them prices remain under pressure as long as Chinese concerns remain in discussion with strength in the greenback to weigh more on the price of gold dollar. While the dollar has remained susceptible to speculation about the plu relaxation, data Fed inflation of the United States Friday saw appeals for there collapse. Although the headline figures arrived at expectations, expectations of price (ex-alimentation & energy) topped kernel with an increase of 2.3% y/y, topping estimates that called for a hold to 2.2% y/y. Adhesion in base price continues to the top of the 2 per cent target, established by the Central Bank, in January, the Fed will find more in more difficult to justify the expansion of the balance sheet as inflation concerns persist. As such, advance the dollar as seen in the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) from the level of support 9900 pivot may continue to gather pace.
The future of next week, investors will be be closely considering the economic role of the United States with sales at retail, industrial production and a wealth of data on the valve housing. Should the key data expectations, seek to advance over the yellow metal traders begin to discount further facilitated with more emphasis on the housing data while the sector continues to drag on the economy of the dollar. On the other hand, the data should continue to disappoint, for gold remain well supported with a jump above to move more attention of April.
From a technical point of view, gold has continued to trade in a formation of well-defined descending channel dating back to March 1 with yellow metal bounced sharply off the coast of the resistance of the chain Friday. The your drop gold prevails until April 1683 $ vertices are honored with the extent of the withdrawal Friday also validate the overall structure of the decline. Interim support now rests with the 38.2% Fibonacci extension taken since ridges on 29 February and 27 March $1635 and low April 1612 $ with our aim in the medium term in the eyes at the confluence of the canal dating from 2010 and December long term support 2011lows and the extension of 61.8% to $1596. Superstructures progress remain capped by support of channel with only a breach over the high monthly $1683 to deny our provisional bias. -MO
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