Gold is still declining from a technical sell signal and a weaker U.S dollar followed by ECB (European Central Bank) meeting is not pushing the gold higher. The ECB will probably do something to help boost the inflation, but it is still too early to see any action now.
Eurostats reported on monday that annual consumer inflation fell to 0,5%, and that`s the lowest since November 2009. A drop from 0,7% in February. If ECB don`t do something about it now, EUR/USD could break above $1,40 and hit $1,50.
The ECB will probably wait and see what`s happening with the inflation. The drop from 0,7% to 0,5% is significant. The correlation between Euro and Gold has been very strong so far.
As the inflation drops dangerously low, Mario Draghi will probably start to announce some kind of a quantitative easing, or some stronger forward guidance, but it could be too early to do that this week.
ECB can lose its monetary policy if they stop absorbing the liquidity. They used to purchase government bonds, and sterilizing it will have a huge impact on the money supply. It will neutralize their impact on the supply and then lower the risk of inflation.
We saw a sell signal on gold at $1320 and gold prices are down -3,0% since the signal told us to sell. Look out for $1250 on gold. That will be a profit target. Gold hits its 7-week low in lack of bullish news.
Many traders are awaiting for the U.S jobs reports on Friday. This is the most important U.S economic report of the month. In the Euro zone, the Markit manufacturing PMI came in at 53,0 last month, down from 53,2 in February.
Next level to look for in Gold is $1250. If it break that level, the bearish down-trend continue. I will look for $19 in silver which is the bears next near-term downside breakout price. Copper is up 0,99% today. Trading at $306,45. Next bull upside level is $310.
Today, I will look at the economic report at 08:15 a.m EST. That news will show us that U.S economic recovery is on track or not. European stocks gains before the report today. S&P 500 is little changed after the gauge closed at a record yesterday.
Reports today:
08:15 a.m EST ADP Nonfarm Employment Change.
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