Daily Market Insights



Gold Looking to Make Some Major Moves

Despite the drop in the June Fed rate hike odds, with a weaker US retail sales and inflation data released last Friday, the odds of interest rate hike are at 73.8%. A rate hike in June is still widely anticipated, with the CME Group calculations, putting the probability well above 70%. In the mean time, the disappointing US retail sales and CPI number that were released on Friday have forced the investors to give a second thought towards the June rate hike.

April unemployment rate came in at 4.4%, a 10-year low, may prompt the FOMC to change the accommodative monetary policy. From a number of economic reports released on Friday, the US inflation and retail sales data managed to move the market, which saw a weaker USD.

However, Chicago Fed's Evans reiterated in a statement after the CPI release that he could support two more hikes this year. Boston Fed President Rosengren, a non-voting member, voiced a preference for and adjustment of balance sheet which he suggests beginning after the June FOMC meeting. He is of a view that the balance sheet will be larger than the levels before the crisis, and he expects gradual balance sheet adjustment to begin in late 2017.

Intraday bias in XAU/USD trading bounced strongly in the last couple of sessions after testing 1218.67 barriers, shifting the downtrend. This makes the trading settle now at the support area that appears in the chart. Some consolidations would be seen as the pair remains bullish for the moment with the new found support intact. The price action holding support levels holds the area on the trend line with a rebound on the area.

Outlook stays with bullish momentum and further rise is expected from current levels with 50EMA approaching. The pair will now look for confirmation to settle above the MA with Oscillators still above 50.0 levels. This indicates the shift in momentum, hence the spot could test resistance at 1242.82 levels as the first target and a break here shall test at 1248.97 levels next.

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