Gold Prices May Rise as Soft US GDP Cools Fed Rate Hike Bets

Talking Points:

  • Gold prices might miscarry as Q1 US GDP news disappoints
  • Crude oil cost drop to 1-month low fails to have staying power
  • EIA supply data, supply count total might equivalent OPEC optimism

Gold prices are adrift in informed territory, mirroring converging in a US Dollar and a priced-in 2017 rate travel trail pragmatic in Fed Funds futures. The spotlight now turns to first-quarter US GDP figures. Consensus forecasts indicate to an annualized benefit of 1 percent, a high slack from a 2.1 percent available in a 3 months by Dec 2016.

A closely-watched foresee of US enlargement from a Atlanta Fed suggests a outcome might be some-more unsatisfactory still. Its GDPNow indication projects opening that is materially worse than even a low finish of marketplace estimates. Meanwhile, information from Citigroup shows US mercantile news-flow underperforming relations to accord bets by a widening domain recently, bolstering a box for a downside surprise.

Soft GDP information might import opposite Fed rate travel bets. While a markets are not severely considering a travel subsequent month, a luck of one in Jun is labelled in during scarcely 70 percent. With confidence in a manly mercantile boost receding, a markets might interpretation that a poignant drop enlargement will check tightening during slightest until a second half of a year, boosting a interest of non-interest-bearing resources including gold.

Crude oil prices sank after news that Libya restarted prolongation during a Shahara field, a country’s largest, and skeleton to move a Waha margin online by mid-June. Losses were ephemeral however as markets weighed adult opposing cues from a International Oil Summit in Paris. OPEC Secretary-General Mohammad Barkindo talked adult bloat on removal inventories and likely a offset marketplace after this year.

Another collection of statistics display a relentless bloat in pitch prolongation might revitalise offered vigour however. Taken together,EIA monthly supply figures and a weekly Baker Hughes supply count report tracking a series of active US descent sites might offer as a manly sign of a cartel’s abating change as pitch prolongation grows.

Will a latest wanton oil and bullion cost moves continue by mid-year? See a forecasts here.

GOLD TECHNICAL ANALYSISGold prices are watchful for uninformed instruction cues carrying slid to a two-week low after commanding nearby a $1300/oz threshold (as expected). From here, a daily tighten next a 14.6% Fibonacci enlargement during 1258.62 targets a 1235.91-41.50 area (October 7 2016 low, 23.6% level). Alternatively, a pull above descending trend line insurgency during 1287.01 exposes a 295.46-1308.00 segment (April 17 high, support-turned-resistance).

Gold Prices May Rise as Soft US GDP Cools Fed Rate Hike Bets

Chart combined regulating TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices dipped to a lowest turn in a month though unsuccessful to secure a mangle next trend line support set from Aug 2016. Confirmation of a crack next a 48.74-85 area (trend line, 61.8% Fibonacci expansion) on a daily shutting basement exposes a 47.08-69 section (March 22 low, 76.4% level). Alternatively, a annulment above a 50% Fib during 49.78 opens a doorway for a retest of 50.71, a 38.2% expansion.

Gold Prices May Rise as Soft US GDP Cools Fed Rate Hike Bets

Chart combined regulating TradingView

— Written by Ilya Spivak, Currency Strategist for

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