Senior Trader Update Tuesday 9th May

Good morning everyone,
 
Choppy, range-driven trading was seen in gold on Monday with both XAU/AUD & XAU/USD rallying after the result of the French election became known but then completely reversing by the close of trading in New York on the back of US dollar and equity market strength, continuing speculative rebalancing across the precious metals complex and with the prospect of a June US Federal Reserve interest rate hike continuing to weigh.
 
If a picture is worth a thousand words, then the attached intraday graph showing an almost 100% (inverse) correlation between XAU/USD & USD/JPY says all that needs to be said about yesterday’s price action. XAU/USD moved in (inverse) lockstep almost tick for tick with USD/JPY - it looks as if gold speculators have chosen to lock in on USD/JPY as their beacon for now.
 
Elsewhere, last week the World Gold Council (WGC) released data showing;
 
·         1st Qtr global gold demand fell due to a sharp decline in investment demand.
·         Demand from the world’s two largest gold consumers, India & China increased by 8% to 282 tons (China) & 15% to 124 (India).
 
·         WGC expects gold demand in 2017 to total 900-1,000 tons (China) & 650 - 750 tons (India).
·         Gold supply fell 12% (year-on-year) with mining production steady.
·         Supply of gold scrap dropped markedly, down 21%.
 
GFMS released provisional data showing that Indian gold imports more than doubled in April to 75 tonnes compared with a year ago due to strong seasonal (festival) demand.
 
Technically, XAU/AUD continued to post a lower high / lower low as it gravitated towards the 50% Fibonacci retracement of the AUD 1578 to 1712.75 move (respectively those are; AUD 1661.25 (38.2%), 1645.30 (50.0%) & 1629.40 (61.8%)), as well as the 55 & 200 day moving averages.
 
XAU/USD tested the 100 Day moving average near USD 1222.00/oz for the second successive day and held for the time being - the last line of defence ahead of the March 10th low at USD 1195.00/oz. Yesterday’s Doji candlestick reflects market indecision around these levels as XAU/USD closed mid-range for the day, just beneath its opening level.
 
The Gold/Silver ratio stalled ahead of the 76.00 level for the fourth successive day.
 
Good luck.
 
Kind regards,
Andre