Head Trader Daily Commentary
05 April 2017
Good morning all,
Chinese participants remained absent yesterday during Far Eastern trade as they observed Tomb Sweeping Day but AUD/Gold took a leg higher when the AUD was pushed lower after the 2.30pm RBA announcement which left interest rates on hold at 1.50%.
With Europe now arriving from around 4pm Sydney time due to clock normalization between the hemispheres, further buying drove the market into the resistance area we flagged yesterday ($1662-$1665). Good scale-up selling was seen into the rally however. Further AUD weakness into European trading kept the market bid and AUD/GOLD hit its pinnacle (its highest level since 10/11/2016) as the AUD/USD reached its nadir.
From there, profit taking / booksquaring saw losses pared in AUD/USD and gains pared in GOLD/AUD. Thus the metal traded as a currency albeit with a direct correlation (strong USD/strong GOLD - as distinct to the more normal inverse correlation that usually prevails) in play.
Technically, the all-important 200-day moving average held the market in check but a move and a close above that level would presage a (continuing) sustained move to higher levels.
Fears surrounding the potential for stock markets retreats as well as lower bond yields continue to underpin the metal’s buoyant price action with dip buying opportunities remaining shallow. Higher highs and higher lows flagging a textbook bull move in progress.
Gold ETFs also recorded inflows of four tons.
Technically, an initial retreat and some price consolidation / market rebalancing within the middle of the channel (see chart) would seem in order before a more concerted attempt at the 200 Day Moving Average. Dip buying is favoured and the market should not be ‘chased’.
Have a good day,
Kind regards,
Andre