Gold Consolidates but Downtrend Remains Intact

Gold prices consolidated forming a doji day where the open and the close are at the same level which reflects indecision. Prices are hovering below resistance after tumbling into a new range, and are poised to test lower levels. Resistance is seen near the 10-day moving average at 1,301, while support is seen near the December lows at 1,240. The 10-day moving average crossed below the 200-day moving average which relates that a short-term down trend is now in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal in oversold territory.

U.S. May Philly Fed’s non-manufacturing sector jumped

U.S. May Philly Fed’s non-manufacturing sector jumped 13.5 points to 39.5 after dipping 1.6 points to 26.0 in April. This month’s level is the highest since the 46.6 from June 2015. The components were mixed with full time employment halved to 7.7 from 15.8, while part-time employment rose to 11.4 from 8.7. New orders tripled to 36.2 versus 12.5. Also prices paid increased to 33.8 compare to 26.0, with prices received climbing to 22.6 versus 12.1. The 6-month index rose 8.6 points to 50.1. This report is consistent with most of the Q2 data are showing a solid pick up in growth from Q1. Indeed, the Q2 headline index is averaging 32.8 versus Q1’s 29.7.

U.S. chain store sales fell

U.S. chain store sales fell 0.6% in the week ended May 19, after falling 0.8% in the prior week. But, on a 12-month basis, the weekly sales pace was unchanged at 4.1% year over year, continuing the recent strength. Also, Q1 sales are coming in around a 2.8% year over year clip, versus a 0.2% year over year increase in the same period last year, according to the report.

 

The Euro Declines as the ECB’s Liikanen said that news from Italy not very encouraging

He was quizzed by lawmakers in Helsinki on Italy’s policy plans Liikanen declined to comment on specific ideas, but said “all the news” coming from Italy recently “isn’t sounding very encouraging”. On ECB policy Liikanen highlighted the exceptional degree of uncertainty related to monetary policy transmission adding that for the time being bringing inflation back to target depends on an expansionary policy. Likkanen also repeated the official ECB guidance that rates will remain low for an extended period of time after the end of net asset purchases.