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XAU/USD: correction in the uplink _04/05/2016

PCM Brokers

Technical analysis and trading recommendations - https://fxpcm.com/en/fx/xauusd-correction-uplink-04052016

At the end of trading on the COMEX on Tuesday, June gold futures fell 0.3% to 1291.80 dollars per troy ounce. Having broken the level of 1300.00 on Monday, the price of gold reached new yearly highs.

Recently, the dollar was under pressure against the background of the fact that the US GDP in the first quarter grew more slowly than expected. According to the presented last Thursday, the US Department of Commerce data, GDP in the 1st quarter grew by 0.5% per annum (vs. 0.7% and growth of 0.9% in the previous quarter), showing the worst result in two years.

On Monday, the dollar fell sharply after the publication of weak data from the US. Thus, the Purchasing Managers Index (PMI) for the manufacturing of the USA, which is calculated by the Institute for Supply Management ISM fell (to 50.8 in April from 51.4 forecast and 51.8 in March).

However, then the trend changed, and the third consecutive day the price of gold declines. On the eve of the publication on Friday of data on the labor market in the US traders closing short positions on the US dollar.

Higher interest rates tend to make the US currency more attractive for investors and contribute to the growth of the dollar, as well as the reduction of gold's attractiveness for investment in view of increase in the cost of purchase and storage.

Nevertheless, the likelihood of higher interest rates in the US in June, according to the quotations of futures on a bet the Fed, estimated at 13%.
Strengthening of the dollar was triggered by the sharp decline in oil prices since the beginning of the month, as well as yesterday's decision of the RBA cut the interest rate (the rate was reduced for the first time since June 2015 to a level of 1.75%).

the WSJ dollar index, which tracks the greenback against a basket of 16 currencies at the end of yesterday's trading session, rose by 0.8%, to 85.29.
From the news today should pay attention to data from the US, which go a block of news in the period from 12:15 on 14:30 (GMT), among them - the changes in the number of people employed in the US (report on employment from ADP) in April, its kind, the preliminary figure published later on Friday Non-Farm Payrolls
Volatility in this period of time the market is expected to high. If the macroeconomic data from the US will be positive, the dollar continues to strengthen the financial market, and the gold price will continue to decline and vice versa.

Source: https://fxpcm.com/en/fx/xauusd-correction-uplink-04052016
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