By FXEmpire.com

Analysis and Recommendations:

Gold is trading at 1651.45 moving mostly sideways, looking for direction. In recent weeks whenever gold comes close to the 1650 price, it flounders waiting for market direction. Today gold moved between small losses and gains. Investors are sitting tight waiting for Friday’s all important payroll report, while they try to determine the mood of the Federal Reserve and the possibility of monetary easing.

The dollar today, picked up momentum against most of its trading partners, limiting the upside for commodities. In Europe it was a day of disappointing eco data, with a negative unemployment report from German and below expectations for PMI throughout all of the eurozone.

Economic Reports for May 2, 2012 actual v. forecast

CNY

Chinese HSBC Manufacturing PMI

49.30

49.10

CHF

SVME PMI

46.9

50.5

51.1

EUR

French Manufacturing PMI

46.9

47.3

47.3

EUR

German Manufacturing PMI

46.2

46.4

46.3

EUR

German Unemployment Rate

6.8%

6.7%

6.8%

EUR

German Unemployment Change

19K

-10K

-18K

EUR

Manufacturing PMI

45.9

46.0

46.0

EUR

Unemployment Rate

10.9%

10.9%

10.8%

USD

ADP Nonfarm Employment Change

119K

177K

201K

Economic Events for May 3, 2012 for the European and US Markets

GBP Nationwide HPI

Change in the selling price of homes with mortgages backed by Nationwide. It’s a leading indicator of the housing industry’s health because rising house prices attract investors and spur industry activity.

EUR French Industrial Production

It’s a leading indicator of economic health – production reacts quickly to ups and downs in the business cycle and is correlated with consumer conditions such as employment levels and earnings; measures Change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities.

GBP Services PMI

Survey of purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.

EUR Minimum Bid Rate

Measures Interest rate on the main refinancing operations that provide the bulk of liquidity to the banking system. Short-term interest rates are the paramount factor in currency valuation – traders look at most other indicators merely to predict how rates will change in the future.

EUR ECB Press Conference

It’s the primary method the ECB uses to communicate with investors regarding monetary policy. It covers in detail the factors that affected the most recent interest rate and other policy decisions, such as the overall economic outlook and inflation. Most importantly, it provides clues regarding future monetary policy.

USD Unemployment Claims

Measures the number of individuals who filed for unemployment insurance for the first time during the past week. Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions.

USD ISM Non-Manufacturing PMI

The Institute for Supply Management measures the level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry. It’s a leading indicator of economic health – businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy.

Just a heads up since gold is volatile and will react to most economic indicators we will begin to post the daily calendar with events that could affect the price of gold. The gold price is sensitive to a number of scheduled U.S. and Euro area macroeconomic announcements–including retail sales, non-farm payrolls, and inflation. Gold’s high sensitivity to real interest rates and its unique role as a safe-haven and store of value typically leads to a counter-cyclical reaction to surprise news, in contrast to their commodities. It also shows a particularly high sensitivity to negative surprises that might lead financial investors to become more risk averse.

These results have a number of implications. To reduce the uncertainty of the return on gold transactions, traders may wish to time their orders flow so as to avoid the release of information that has been shown to affect prices. For longer-term market participants, these results provide confirmation of the pro-cyclical bias of many commodities and gold’s role as a safe-haven during periods of economic uncertainty.

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Originally posted here