Senior Trader Daily Update- 28/04/2017

Good morning everyone and Happy TGIF!.
 
A one word summation of price action overnight in XAU/AUD and XAU/USD? Stasis.
 
Gold was largely confined to an AUD 1690 – 1700 range on Thursday, while in USD terms the metal chopped around between USD 1262 – 1270 (albeit with a modest ‘offered’ tone) as consolidation remained the order of the day.
 
While geopolitics remains firmly on investor radars, the main topic of interest yesterday was the European Central Bank’s (ECB) decision to keep the monetary spigots open as it left its benchmark refinancing rate at 0%, its marginal lending facility at 0.25% and the deposit rate at negative 0.4%. The central planners bankers €60bn money printing government bond purchase (‘quantitative easing‘) schedule will continue unimpeded until at least the end of 2017. ECB President Draghi’s opening comments did acknowledge economic growth but the bank remains open to monetary policy flexibility if “the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the programme in terms of size and/or duration.”
 
From the US, overnight data releases included Weekly Initial Jobless Claims which came in at +14K (to 257k vs 241K expected), Durable Goods Orders for March were +0.7% (vs +1.2% expected).
 
Friday sees the release of Quarterly GDP data from the US with expectations in the +0.8% to +1.0% (annualized) range. Some pundits however are anticipating a downside disappointment, suggesting just a +0.2% / +0.3% result which would put the proverbial cat amongst the pigeons by inferring that the US Federal Reserve has commenced its rate normalization agenda into the teeth of a recession.
 
Earlier in the week we commented that a potential shutdown / default by the US government had been averted with President Trump kicking his plans to obtain funding to “build the wall” on the Mexican border into the long grass until September, in return for lawmakers acceding to a request to increase the ‘debt ceiling’. Well, all bets are off again. News overnight that the Republican party were in the position to have the necessary votes to repeal Obamacare presented the Democrat party with a cudgel to hold the Administration hostage (potentially on a weekly basis) by refusing to approve any increase to the debt ceiling if Obamacare is repealed, thereby leaving the prospect open again of a government ‘shutdown’.
 
Technically, XAU/AUD remains bound by resistance at the AUD 1710/1715 region and support at the top of the previous uptrend channel which comes in today at around AUD 1675. In USD terms, gold remains within the triangular congestion region and some consolidation within the USD 1245 – 1265 zone remains favoured to provide a better base from which gold bulls might regroup and attempt a fresh assault on the psychologically important USD 1300.00 level eventually (nothwithstanding breaking the MAJOR trendline resistance that commenced in September 2011).
 
Silver, (the metal that makes millionaires out of billionaires) has drawn investor ire in recent days, weakening in the face of general price buoyancy across the rest of the precious metals complex and in the process, has sent the Gold/Silver ratio (the number of ozs of silver that 1 oz of gold will buy) towards 73.00 - a 5 month high.
 
Good luck and have a great weekend!
 
Regards,
Andre