XAU/USD: The Price of Gold is Going Down Today - Fundamental analysis of 17.05.2016.
World stock indices are growing and investors’ risk appetite is growing as well. By the end of the session on Monday, Japanese stock index Nikkei Stock Average closed with the rise of 0.3%, Australian S&PASX200 rose by 0.6%, Chinese Shanghai Composite – by 0.8%. On Tuesday, at the end of the Asian session, Japanese stock index Nikkei Stock Average rose by 1.1%. European stock indices are growing too at the opening of European session on Tuesday.
Judging by the quotes of futures for the US Fed interest rates, market participants assess probability the interest rate increase as 4%, strong US data on retail sales and employment provided support to the USD for the past two weeks.
Fed president of Richmond Jeffrey Lacker said yesterday that general state of the American economy is quite good and negative scenarios have not been actualized. He also said that there probability of the interest rate increase at the next meeting of the US Fed in June is very high.
Low interest rates are favourable for gold. Since investing in gold does not bring profit to the investors, gold cannot compete with the profitable assets, when the cost of borrowing in the country is growing. Higher interest rates increase attractiveness of the USD for investors.
In Q1 2016 gold has demonstrated the highest rise in the past 30 years amid high market volatility and economic uncertainty in the world.
Although, on Monday the price of gold has reached the highs at the level of 1290.40 USD per ounce, June futures for gold at COMEX closed trades with the rise of 0.1%. At the opening of today’s European session the pair XAU/USD continued to decline.
Amid the rise in the risky assets, prices of gold and the Yen are declining.
Today’s news will include:
14:30 - 15:15 US data on consumer price index; commenced home constructions; volume of industrial production; capacity utilization. The latter indicator assesses economic growth and the level of demand. Positive data may lead to the rise in inflation and in general, is considered favourable for the USD. According to the forecast the index can rise by 75.0% against 74.8% a month ago.
In case of the positive US statistics, the USD will go up in the market, which will add pressure on the pair XAU/USD.