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  • Gold eases from late February tops in the latest pullback move.
  • Sentiment remains positive amid strong US data, downbeat yields and US dollar bounce.
  • US-Russia jostles over new sanctions, Washington-Tehran talks also offer market jitters but nothing important.
  • China data dump, vaccine news can offer an active Asian session.

Gold bulls catch a breather around a two-month top while stepping back to $1,764 amid the initial Asian session trading on Friday. The yellow metal surged the most since early March, not to forget refreshing the multi-day high, amid broad risk-on mood. However, geopolitical headlines and cautious sentiment ahead of the key Chinese statistics seem to have probed the precious metal buyers off-late.

Further upside needs fresh fuel from China”¦

Not only a 9.8% jump in the US Retail Sales but the strongest Philadelphia Fed Manufacturing gauge in 48 years, not to forget upbeat Empire State Manufacturing and weaker-than-expected Jobless Claims, portrayed a rosy picture of the world’s largest economy. This is backed by the Fed’s call for faster recovery and highlights the taper tantrum which helped the US dollar index (DXY) to recovery from a one-month low, needless to mention the drop in the Treasury yields.

However, Wall Street benchmarks refreshed record top on the strong data while gold buyers also intervened amid economic optimism. Also favoring the yellow metal could be the US tussle with Russia over the latest sanctions as well as with China over Hong Kong and Taiwan issues. It should be noted that the Washington-Tehran negotiation is also less likely to solve the old riddle and may keep the unfriendly relations between the US and Iran, which in turn favors gold’s safe-haven demand.

Recently, the US Centers for Disease Control and Prevention (CDC) delayed the Johnson & Johnson verdict to the late next week amid a dearth of data, which in turn dims the vaccine hopes and tests the economic recovery expectations. Also, Fed policymakers from Cleveland and San Francisco signaled that the road to recovery is long.

Against this backdrop, S&P 500 Futures wobble around record top above 4,150 while searching for fresh clues to keep the latest risk-on mood.

In doing so, China’s Q1 GDP and March’s Industrial Production, as well as Retail Sales, will be the key to watch. Ahead of the release, TD Securities said, “A very low based in March last year will make this month’s China data look overly impressive. Nonetheless, the underlying picture presented by this month’s data dump will likely be a positive one. Industrial production is likely to record a solid 18% y/y gain (cons: 19%), with output continuing to be helped by strong export demand and strengthening domestic momentum. We see upside risks to retail sales and look for a 30% y/y increase (cons 28.5%). Last but not least, GDP is likely to record a small gain on the quarter (cons: 1% q/q), but on y/y basis is likely to look particularly strong (cons: 18.2%) given the weakness in Q1 last year.”

Technical analysis

Although gold bears are less likely to enter unless witnessing a fresh drop below $1,730, buyers may look for sustained trading above $1,765, comprising November 2020 low, for conviction.

 

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