Here are the key factors to keep in mind today for Gold trades:
- Chinese Interest Rate Cut: The PBOC (People’s Bank of China) decided to lower its interest rate, or the one-year lending rate, by 0.25% from 5.35% to 5.10% over the weekend. This move was not expected and sent ripple effects through Asian currency markets. The Australian Dollar as well as the New Zealand Dollar, heavily dependent on commodity exports to China, saw volatility increase during the session while commodities such as gold and silver were also impacted as forex traders moved cash out of currencies and sought out safer investments until the Chinese rate cut has time to work itself through trading desks around the world.
- New Zealand Card Spending: The New Zealand consumer scaled back in using their cards in April as card spending contracted by 1.1 month-over-month. This almost wiped out the downward revised increase of 1.2% reported in March. Retail card spending contracted by 0.7% in April month-over-month. Economists expected an increase of 0.5% which would have followed the downward revised increase of 0.7% reported in March. The slowdown in activity by the New Zealand consumer could spell more trouble for the economy on top of depressed commodity prices. Gold is expected to feel the impact of this.
- Australian NAB Business Confidence and Conditions: Commodity traders received a mixed report out of the NAB release on business confidence and business conditions. NAB Business Confidence came in at 3 for April which matched the 3 reported in March, but NAB Business Conditions fell to 4 in April which commodity traders can compare to the 6 reported in March. As economic conditions deteriorate many traders often seek the comfort of gold to hedge their trading portfolios.
- Bank of England Announcement: The Bank of England is expected to keep interest rates on hold at 0.50% while the Asset Purchase Target is also expected to remain unchanged at £375 billion. What could move markets is the statement that there may be a potential change on the horizon. Any change in the language of the statement may indicate that the Bank of England is considering making adjustments to current monetary policy.
- Eurozone Finance Ministers Meeting in Brussels: Given the situation in Greece which is days away from running out of money, every meeting of Eurozone Finance Ministers can be accompanied by positions adjustments of trading portfolios.
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