AUD/USD: Stay Long For 0.7300, Key Resistance At 200-dma

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GOLD Rises Supported By Fund Inflows

• Gold rose slightly on Tuesday as Asian shares reversed gains and the dollar slipped, with the metal also supported by big inflows into bullion funds.

• We do not expect recent pace of rises to be kept in the near term, especially if stock markets strengthen. Greater investor risk appetite erodes demand for gold, while increased scrap adds to supply as major consumers are shying away from physical purchases.

• The volatility index (VIX), which measures implied volatility of stock options and is often seen as an investor fear gauge, fell below 20% this week, hitting the lowest closing level since early January.

• But we do not think that recent decline in gold prices means that the rally is over. Demand for bullion exchange traded funds and possible weakening of the dollar could support the metal in the medium- and long-term. Assets in SPDR Gold Trust, the top gold-backed exchange-traded fund, rose 2.64% to 752.29 tonnes on Monday, the highest since March 2015. The fund's inflows since the beginning of the year have already surpassed outflows for the whole of 2015.

• We keep our trading strategies unchanged. Gold price is still above a strong support level is 1200.00, which is a psychological barrier and 14-day exponential moving average, which keeps current bullish sentiment intact.

GBP/USD: Overall Bias Remains On The Downside

• The Bank of England Governor Mark Carney said the central bank had a number of options to stimulate Britain's economy if needed, including interest rate cuts and shortening its time horizon for returning inflation to target. He said: “If we were in a position where the economy needed additional stimulus ... we could cut interest rates towards zero. We could engage in additional asset purchases, including a variety of assets.”

• He said the central bank was not making judgments about the outcome of Britain's referendum on EU membership, but noted moves in sterling since the date of the vote was set. He said hedging from investors against future falls in sterling around the referendum date on June 23 had spiked to levels seen around the Scottish independence referendum, adding the hedging was focused on the sterling-dollar rate.

• Bank of England Deputy Governor Minouche Shafik warned that interest rates might rise sooner than financial markets imply. Shafik said it was more likely than not that the next move in interest rates will be up, even if unclear prospects for wage growth makes the timing uncertain. Last week, her colleagues Jon Cunliffe and Martin Weale also commented on market expectations, which suggest the BoE will wait until 2019 before raising interest rates from their record low levels. They said they would be surprised if Britain's central bank took as long to hike interest rates as markets expect.

• Sterling steadied today after the launch proper of Britain's debate on leaving the European Union drove its biggest one-day fall in David Cameron's six-year premiership. Derivatives markets now show the largest bias towards sterling weakness over the next six months since at least the parliamentary elections of 2010.

• Overall GBP/USD remains on the downside, but is a bit oversold short-term. We stay sideways now, but will consider getting short in case of recovery to 1.4280.

AUD/USD: Long For 0.7300, Key Resistance At 200-dma

• The AUD/USD is rising on the improving risk appetite fuelled by a sustained rally in iron ore prices. The price of iron ore,Australia's top export earner, has risen 17% so far this year. Its bounce from a multi-year low hit in December underpinned market hopes that the worst may be over.

• We expect the AUD/USD to rise to 0.7300 as a consequence of risk appetite return. The major resistance is 200-day moving average at 0.7282, a level that has contained rallies for 16 months. Breaking above this level will be a strong bullish sign for long-term traders.