17th April 2019 - The bullish market sentiment puts pressure on Gold

Walid Salah Eldin

Active member
The optimism is still containing the market sentiment weighing down on the demand for safe haven options like god which is trading currently close to $1275 per ounce, after the released economic data from china have shown today that the Chinese economy is able to keep its expansion pace and resilient enough to absorb shocks.

The Chinese economy could grow again by 6.9% in the first quarter of this year as the same as the last quarter of last year while the consensus was referring to 6.8% yearly GDP expansion.

The Chinese industrial production soared in March by 8.5% YoY scoring the highest yearly rising since July 2014, while the median forecast was referring to increasing by only 5.9%, after rising by 5.3% in February.

The Chinese manufacturing sector pick-up in March has already been highlighted previously in the beginning of this quarter with the release of Mar Chinese Manufacturing PMI which rose to 50.5, while the consensus was pointing to rising to 49.5 from 49.2 in February.

The retail sales in China came out also today showing rising by 8.7% and the foreseen was only 8.4%, following increasing in February by 8.2%.

AUDUSD could be boosted to rise for trading currently above 0.72 following these data which refer to higher than expected economic evolving in China can spur its demand for commodities from Australia

The Data could also prop up the risk appetite during the Asian session sending Shanghai Composite up by 0.29%.

The US major equities indexes future rates could also capitalize on these data adding more gains, with no shocking companies quarterly earning released reports yet to drive the investors' risk appetite down.

While the markets are still waiting for Trade deal between US and China to come to underpin the business spending in this major economies further, after the two sides became closer and closer to reach a deal as Trump economic adviser Larry Kudlow said last week, after he was saying before April that the administration is prepared to keep negotiating with Beijing for weeks or even months!

USDJPY is now trading just above 112 underpinned by this risk apatite improving which weighs down on the demand for Japanese Yen which could have the excuse to come down as a low yield financing currency amid this prolonged risk on sentiment since the beginning of this year.

The demand for safe haven and gold can hang on for a considerable period of time waiting for serious talking about cutting the interest rate in US, while the Fed's current adopted patience stance can hold with no higher inflation pressure signs yet.

While the US labor market is still keeping sending very positive signals like US initial jobless claims which has dropped in the week ending Apr. 5 to the lowest level since 1969 reaching 196k.

In this same time in UK, The British pound is still struggling with no sign of changing the current complicated political stance over Brexit like what Jeremy Corbyn said earlier this week, After the EU granted a second Brexit extension until Oct. 31 including a clause that allows Britain for an early exit erasing the immediate "Hard Brexit" Risk which is strongly unwanted by the financial and the banking sector as BOE repeated several times.

This extension can drive the UK economy to longer Economic stalling period, while the confidence in business investment is still hanging on certainty about Brexit.

BOE president Mark Carney is expected to confirm on that again when he is to speak later today, after he had mentioned last week that the business investment has stalled in UK since June 2016 referendum praising this extension which lowered The risk of no Brexit deal.

Anyway, this miserable stance should end to something certain about Brexit this year and I am still sticking to my same perspective that The BOE is close to have interest rate cutting by the end of this year to boost confidence and stimulate economy, amid the current lower inflation pressure and the sake for meeting the supply building up at a closer point to avert economic deterioration in UK.

While UK labor market will be in need for boosting demand and the Brexit outcome can take time to reward the economy by new created jobs, if it is to do!

As we have seen yesterday UK jobless claimant losing 28.3k of jobs in March recording the 10th consecutive month of losing and the highest since April 2018, while the median forecast was referring to losing only 20k, after 26.7k in February

Before UK March inflation data coming today to show lower input prices over the producing level in UK and rising of CPI by 1.8% yearly as the same as February, while the consensus was referring to increasing by 1.9% to stand well below BOE 2% yearly inflation goal for the seventh consecutive month.

XAUUSD Daily Chart:

XAUUSD-Daily-17-04-2019 01-31-54 م.jpg

XAUUSD is now trading near $1275 after yesterday exposure to higher downside momentum on extending the slide below this Apr. 4 low at $1280.93.

This slide extension came after The gold lost last week more of its upside momentum by forming another lower high at $1310.59 to come below $1324.52 which has been formed on Last Mar. 25 below last Feb Peak at $1346.73

After diving below its daily SMA50 last week, The gold extended its slide to be trading currently below its daily SMA100 in another dovish signal.

XAUUSD is trading now in its third day in a row below its daily Parabolic SAR (step 0.02, maximum 0.2) which is reading today $1308.

The daily chart of XAUUSD shows that its RSI-14 is now in lower place inside the neutral region reading 36.740.
XAUUSD daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having now its main line inside its oversold territory below 20 reading 11.864 leading to the downside its signal line which is higher in the same region at 13.744, after negative crossover just below its overbought area above 80.

Important levels: Daily SMA50 @ $1304, Daily SMA100 @ $1288 and Daily SMA200 @ $1250
The Closest Experienced S&R:
S1: $1272.99
S2: $1253.46
S3: $1232.95
R1: $1310.59
R2: $1324.52
R3: $1346.73

Kind Regards

Global Market Strategist of FX-Recommends

Walid Salah El Din
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