Gold Edges Higher as Momentum Turns Positive

Gold prices continue to trade sideways, in a very tight range. The dollar eased again on Thursday, allow the yellow metal to remain buoyed. Support is seen near an upward sloping trend line that comes in near 1,287. Resistance is seen near the 50-day moving average at 1,316. Momentum remains positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices.

Eurozone Q1 GDP growth was confirmed

Eurozone Q1 GDP growth was confirmed at 0.4% quarter over quarter, 2.5% year over year, as expected and in line with the preliminary release. The breakdown, which was released for the first time, showed private consumption growth accelerating to 0.5% quarter over quarter from 0.2% quarter over quarter, while public consumption stagnated. Exports contracted -0.4% quarter over quarter after jumping 2.2% quarter over quarter in Q4 last year and net exports detracted -0.1% points from the quarter growth rate. The data and the slowdown in the quarterly growth rate from a strong 0.7% quarter over quarter in Q4 2017 was partly due to special factors, including adverse weather conditions and the timing of Easter this year.

German orders slumped

German orders slumped -2.5% month over month in April, with the March reading revised down to -1.1% from -0.9%. The second months of contraction left the annual rate at -0.1%, down from 2.9% year over year in March and the first negative reading since July 2016. Expectations had been for a rebound from the dip in the previous month and while there may be some special factors still at play related to holiday’s and bridging days, the numbers are a worry and will add to concerns that the German recovery is slowing down much faster than feared. The breakdown showed domestic orders in particular weighing down the index, with a drop of -4.8% month over month. Export orders rose for a second months and that Eurozone orders slumped -9.9% month over month, after already falling -2.9% month over month in March cast a shadow over the outlook.

Atlanta Fed’s GDPNow model estimates a 4.5% real growth

Atlanta Fed’s GDPNow model estimates a 4.5% real growth rate for Q2 following the April trade report as the nowcast contribution of net exports to real growth in Q2 inched down to 0.31% from 0.42% previously. The headline forecast is down slightly from the 4.6% projection from Tuesday after the stronger than expected ISM services report.