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On the intraday chart of GOLD, we are observing a complex correction in the making with current slow price activity being sub-wave B) as part of a correction. That said current slow price development suggests a triangle in the making within wave B), that may after its completion point towards more weakness in the following wave C). Support for the whole correction may later be around the 38.2 Fibonacci ratio or even lower around the previous swing low at 1246 level.

GOLD, 1H

Market movers ahead

• The market will monitor incoming opinion polls ahead of the second round of the French Presidential election.
• The FOMC is set to meet on Wednesday. We do not expect major changes in monetary policy or the statement.
• We expect the US labour market report to show employment gains of 170,000 in April.
• We look for small declines in April's Chinese manufacturing PMI and the US ISM manufacturing indices due for publication next week.
• FX reserve data is due in Denmark and Norges Bank is set to meet next week. We do not expect major changes in either announcement though.

Global macro and market themes

• Markets are less worried about France, as Emmanuel Macron is the clear favourite against Marine Le Pen.
• Do not get overexcited about Trumponomics.
• With markets less worried about political uncertainty in Europe, focus may soon return to economics.
• We do not expect much action at next week's Fed meeting.
• The rising risk from North Korea is a joker.

Focus

• Tensions are rising fast between the US and North Korea and are likely to escalate further if North Korea continues with plans to carry out a nuclear test

Full Report in PDF

Daily Pivots: (S1) 110.68; (P) 111.23; (R1) 111.60; More....

As long as 109.58 minor support intact, further rise is still expected in USD/JPY. Sustained trading above 111.58 support turned resistance will indicate that fall from 118.65 is merely a corrective move and has completed. Outlook will then be turned bullish for 115.49 resistance and above. However, break of 109.58 will argue that fall from 118.65 is still in progress and will turn bias to the downside for 108.12 and below.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. Current development suggests that it's not completed yet and is extending. In case of deeper decline, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Daily Pivots: (S1) 0.9919; (P) 0.9941; (R1) 0.9963; More.....

Intraday bias in USD/CHF remains neutral as consolidation form 0.9897 is still in progress. At this point, with 0.9999 minor resistance intact, deeper fall is still in favor. Below 0.9897 temporary low will turn bias to the downside for 0.9812 and possibly below. Nonetheless, whole decline from 1.0342 is seen as a correction. Hence, we'll look for bottoming signal below 0.9812. Meanwhile, on the upside, above 0.9999 minor resistance will turn bias back to the upside for 1.0107 resistance.

In the bigger picture, we're still maintaining that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the cross. However, the corrective nature of the fall from 1.0342 is starting to give the medium term outlook a bullish favor. Hence, in stead of looking for topping signal around 1.0342, we'd now pay closer attention to upside acceleration as USD/CHF approaches this level again.

Daily Pivots: (S1) 1.0837; (P) 1.0885 (R1) 1.0918; More....

Intraday bias in EUR/USD remains neutral for the moment. At this point, another rise could be seen as long as 1.0777 support holds. But still, rise form 1.0339 is seen as a corrective move. Hence we'd pay attention to topping signal even if EUR/USD rises through 1.0949. On the downside, below 1.0777 minor support will turn bias to the downside for 1.0569 support first.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

Highlights:

• US GDP growth slowed to a 0.7% annualized pace in Q1 from 2.1% in the prior quarter.
• The increase fell slightly short of market expectations for a 1% gain.
• Consumer spending growth dipped to 0.3% following three consecutive quarterly gains of 3% or more.
• Slower inventory investment subtracted nearly a percentage point from headline growth.
• Government spending unexpectedly fell for the second time in the last year.
• Business investment rose nearly 10%, the best gain in three years.

Our Take:

While today's GDP report confirms a slow start to the year, we are far from ready to throw in the towel on our forecast for growth to pick up in 2017. In fact, the underlying details generally support our outlook for a more broadly-based increase in domestic spending to underpin above-trend activity this year. Much of the moderation in Q1 growth reflects a substantial slowdown in consumer spending that looks unlikely to persist given a myriad of factors supporting households (including wage growth and rising confidence), not to mention the transitory nature of the dip in Q1 utilities spending. Aside from that, accelerating business investment and another strong add from housing made for the best gain in private fixed investment since 2012. Given improving business sentiment and less drag from the energy sector, we think the pickup in Q1 capital spending can be sustained (though perhaps not at Q1's impressive pace). An expected return to solid growth in consumer spending would then allow for domestic demand to increase at a 2½% clip over the remainder of the year.

We doubt the Fed will have a much different take at next week's policy meetings. Earlier comments indicated the Committee views slower Q1 growth as largely reflecting transitory factors, so today's reading shouldn't do too much to dampen their otherwise positive economic outlook. We look for rates to be on hold in May but think a June hike is likely if the rebound in growth plays out as expected.

Highlights:

• Canadian GDP was unchanged in the month following the outsized 0.6% spike in January. The earlier strength points to Q1 GDP rising an annualized 3.8% despite the February pause.
• Goods-producing industries fell 0.3% reflecting relatively broad-based declines.
• Within goods-producing industries manufacturing output dropped 0.6% while mining and utilities both declined 0.2%. Some offset was provided by construction output rising 0.5% reflecting gains in both residential and engineering building activity.
• Service-producing industries rose 0.2% helped by strong housing activity sending the real estate component up 0.5% with finance and insurance also up a solid 0.7%. The main offsets were declines in wholesale trade (0.4%) and transportation and warehousing (0.3%).

Our Take:

February's flat monthly reading belied an acceleration in the annual pace of growth with real GDP output up 2.49% compared to a year earlier. This was the fastest pace of increase since July 2014 and reflects the recovery in the goods-producing sector. Mining production was up 6.4% in line with the recovery in commodity prices, which represents a marked turnaround after two years of decline. Growth in service-producing industries was steadier over the last two years though accelerated slightly in February. This broad based strengthening pumped the annual growth in overall GDP higher in February relative to January's 2.29% pace. This report confirmed that the economy continued to grow faster than the Bank of Canada's current estimate of potential of 1.3% for the past six months. Sustained above potential growth provides a strong argument for the central bank to start to withdraw some of the current stimulus in the system. However, recent comments by the Bank of Canada, though acknowledging the recent strength in growth, showed little indication to immediately start to tighten policy. A key restraining factor is concern about potential trade impediments being introduced by the U.S. government dampening both exports and business investment. The Trump Administration's imposition of tariffs on lumber exports announced earlier this week provide reason for the Bank of Canada to remain wary of this risk.

The CAC has ticked higher in the Friday session. Currently, the index is trading at 5,280.50. On the release front, French indicators were a mixed bag. GDP for the first quarter came in at 0.3%, close to the estimate of 0.4%. Consumer Spending disappointed with a decline of 0.4% compared to an estimate of a 0.6% gain. Preliminary CPI came in at 0.1.%, shy of the forecast of 0.2%. There was better news out of the eurozone, as Eurozone CPI Flash Estimate improved to 1.9%, edging above the estimate of 1.8%. Later in the day, the US will release Advance GDP for Q1, with a forecast of 1.3%.

Inflation in the eurozone is again on the rise. The estimate for CPI in April improved 1.9% in April, up from 1.5% in March. Although inflation levels have moved higher, Mario Draghi stated on Thursday that the ECB was not changing its inflation forecast or making any changes to its asset-purchase program. The ECB held rates at a flat 0.00%, and the rate statement and comments from Mario Draghi were more dovish than the markets would have liked. The current ultra-loose policy, which includes a quantitative easing program of EUR 60 billion/mth, has been in place since 2008. Draghi acknowledged that the eurozone is in better shape, noting that economic conditions had improved and downside risks had decreased. There had been speculation that the ECB might taper or bring forward its asset-purchase program, which runs until December. The ECB holds its next meeting in June, and the markets will again be looking for some tightening from the ECB.

French voters will again have their say on May 7, when the winner of the presidential election will be decided. The two candidates left standing after the first round of voting are centrist Emmanuel Macron and National Front leader Marie Le Pen. European stock markets have been steady over the past few days, having priced in a victory by Macron. Opinions polls ahead of the first round were on target, forecasting that Macron and Le Pen would advance to the second round, with 24% and 22% of the vote, respectively. The markets are thus relying on the polls for the second round, which show Macron with a comfortable lead of 60-40. Le Pen is a heavy underdog, compounded by the fact that some candidates from the first round, as well as former President Francois Hollande, have publicly called for voters to support Macron. Still, a strong showing by Le Pen next Sunday would show that her strident anti-EU stance has wide popularity, and this could sour investor sentiment and send European stock markets lower.

One of President Trump's most important campaign platforms was a promise to reform the US tax code. Trump finally announced his long-awaited tax plan on Wednesday. The proposal calls for sharp reductions for both individuals and corporations. The plan calls for three tax brackets for individuals – 10%, 25% and 35%. The corporate sector would also see significant tax relief, with the corporate tax rate dropping from 35% to 15%, and the tax on multinationals' overseas profits lowered from 35% to 10%. However, any tax reform proposals from the White House will require a stamp of approval from Congress, so Trump's proposal should be viewed as a blueprint that is a long way off from becoming law. Trump's proposal was short on details, although government officials are praising it as one of the largest tax cuts and broadest overhauls of the tax system in history. There hasn't been much reaction from the CAC or other European stock markets, which have been subdued in Thursday trading.

Spot gold has seen a 1.56% retracement over past two weeks after hitting its highest level of 1295.37 last seen on November 9th 2016. That said, this retracement has held above the support line at 1260 over the past two days.

On the 4-hourly chart, the price broke the downtrend line resistance on April 26, indicating bullish momentum has been increasing.

The daily Stochastic Oscillator reading is below 30 suggesting a rebound.

US Q1 GDP annualized initial reading, Q1 PCE and Q1 core PCE inflation figures (QoQ) will be released at 13:30 BST today. This will be the first US GDP figure reported since Trump took office.

During the early European session this morning USD has weakened ahead of the release of Q1 GDP as markets are expecting the figure will show an economic growth slowdown.

Spot gold has nudged up, helped by the weakening of USD.

Growth in the US economy has shown a slowdown since Q4. If Q1 GDP underperforms it will likely push gold prices higher and test resistances. Conversely, if the Q1 GDP reading beats expectations, then it will likely weigh on gold prices and test supports.

The resistance level is at 1268, followed by 1270 and 1273.

The support line is at 1265, followed by 1263 and 1260.

Daily Pivots: (S1) 1.2855; (P) 1.2885; (R1) 1.2933; More...

Intraday bias in GBP/USD remains on the upside and current rise from 1.2108 should target 161.8% projection of 1.2108 to 1.2614 from 1.2365 at 1.3184. At this point, price actions from 1.1946 are still interpreted as a correction pattern. Therefore, we'd expect strong resistance below 1.3444 to bring larger down trend resumption. On the downside, break of 1.2755 minor support will turn bias to the downside. Further break of 1.2614 resistance turned support will now indicate near term reversal.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.