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Daily Briefing, May 31 – Canadian GDP & How to Trade Gold Today?

The global financial markets had a comparatively soft day on Friday as several geopolitical risks emerged ahead of the weekend. Looking forward to the trading session, the economic calendar is offering a few top-tier catalysts which may help us determine further trends of the market. Ready to dig deeper?

GDP m/m – 12:30 GMT
Although the economic calendar looks light, we should be monitoring the GDP figures from Canada. Canada’s first-quarter GDP release won’t be particularly interesting unless we see upbeat figures vs. what we saw in the final quarter of last year.

However, there are likely to be few concerns in and around the report which may include:

1) Since the second quarter of 2016, the Canadian trade deficit is the widest.

2) The manufacturing PMI broke below the critical 50-threshold in April, dropping into recession territory

3) Construction starts moved down 9.9% in Q1 2019, which implies that we aren’t yet out of the housing market slowdown.

On Friday, first-quarter GDP estimates will be crucial in supporting policymakers’ conclusions about whether the economy is on the mend from the soft patch encountered at the end of 2018.

Gold Skyrocketing – US-China Trade War Boosts Safe Haven Appeal

The price action in the metals continues to show that traders are trying to push the metals higher over trade war fears. As we often talk about, investors trigger the demand for safe-haven assets during times of uncertainty.

Earlier today, the precious metal gold prices fell to 1,274 despite intensified Sino-US trade tensions as investors didn’t find any solid reason to buy gold. However, gold has to break the $1,289 resistance first if it wants to get to $1,300.

What Unexpectedly Triggered Gold Buying?

Most of the buying was triggered after the Bloomberg report that China has halted purchases of American soybeans in the next move in the intensified trade war with the US. Well, tensions between the US and China escalated further today after China’s state-owned newspaper People’s Daily warned the US to not “underestimate China’s ability to strike back.”

Gold’s Technical Outlook
Well, we can see a doji candle on 3-hourly charts at 1,280. This extended reliable support to gold. Gold also formed a bullish engulfing pattern right next to doji pattern, which signifies that bears are exhausted and bulls are likely to enter the market.

As a result of these technical factors, gold showed a dramatic surge and managed to violate 1,284 and 1,287 resistance areas. For the moment, gold is likely to close 3-hour candle below 1,292 resistance. This may offer us an opportunity to long the precious metal to target 1,300 today. So, let’s keep an eye on 1,292 as it can help us encash quick 40/50 pips during the US session.

All the best!

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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