Gold Back To Tracking The Economy?
Today’s Spotlight Market
Gold futures have fallen in recent sessions, as trade reflects more of a correlation with economic activity rather than trading on uncertainty. Weaker economic data in China as well as weakness in NASDAQ stocks set a negative tone for trading yesterday.? It will be interesting to see if Gold resumes trading lockstep with economic activity instead of fear-based trading. The Group of Seven will not be joining the G8 meeting in Sochi, instead opting to meet in Brussels in June.? The EU and US are weighing additional sanctions to discourage Russia from making incursions beyond Crimea, which could revive the defensive demand for Gold.
Fundamentals
Chinese manufacturing data showed negative growth for the third consecutive month, suggesting that physical demand for the metal could be weaker than previously expected.? While this could be seen as a negative sign for Gold, the weakness in manufacturing may spur the People’s Bank of China to move forward with a fresh round of stimulus.? NASDAQ stocks took a hit after biotech stocks sank.? The high-flying sector took a roughly 4.7% hit.? If biotechs continue to sag, the broad market may be a bit softer, which could lessen Gold’s near-term appeal. Statements from Fed Chairwoman Janet Yellen about the US employment situation set a negative near-term slant on Gold.? However, the Fed also plans to remove its employment rate targeting.?? ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the April Gold futures contract forming a reversal last Monday.? Preceding the reversal, we see the RSI was diverging from prices. The recent sell-off has resulted in the RSI going from overbought to near oversold levels.? Prices are approaching the 50-day moving average.? Failure to stay above the average could be seen as negative.? Prices are also approaching the 1289.00 and 1270.00 support levels.? 1270 could be seen as significant, as prices could test the 1200.00 level on the downside.
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