Gold is inching closer to record highs in AUD and NZD terms, not surprisingly though, as speculations are rife that both the Reserve Bank
of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) would cut rates this year.
Earlier this week, RBA's Lowe put rate cut back on the table, reinforcing expectations that the central bank would reduce interest rates by 25
basis points this year. The central bank head cited weak household spending, slumping house prices as key risks to Australia's economy.
Further, the RBA said in its statement on monetary policy today it now sees the economy expanding by just 2.75% in 2019, down from the 3.25% forecast issued at the end of last year. Core inflation is seen rising 2 percent this year, as opposed to the previous forecast of 2.25 percent growth.
Many believe these forecasts are too optimistic and could be revised lower in the near future. Add to that, the Sino-US trade tensions and China's unwillingness to introduce "flood-like" stimulus and the probability of RBA delivering two or more rate cuts this year looks strong.
Hence, the zero-yield safe-haven metal could print fresh lifetime highs above the January high of AUD 1,902 in the near term. It is worth noting that
XAU/AUD is set to post a record closing high today, as seen in the chart below.
XAU/AUD monthly chart
As seen above, gold created a doji candle last month, signaling indecision in the market place. A bearish reversal would be confirmed if prices end this month below AUD 1,781 (January low).
The metal, however, is more likely to signal a continuation of the rally with a close above AUD 1,902, courtesy of dovish RBA expectations.
Supporting that bullish case is the channel breakout on the relative strength index and the ascending 5- and 10-month moving averages
The bullish case would weaken if and when prices find acceptance under the 10-month MA, currently at AUD 1,724.
Gold in NZD terms
New Zealand reported weaker-than-expected employment numbers yesterday, triggering speculation the Reserve Bank of New Zealand might sound more open to rate cuts at its policy meeting, scheduled for Feb. 13.
As a result, bonds picked up a bid, sending the yield on the benchmark 10-year New Zealand government bond yield slumped to a record low of 2.11 percent earlier today.
The dovish RBNZ expectations could keep the yellow metal better bid in NZD terms.
XAU/NZD weekly chart
The metal is already on the offensive, having witnessed a large symmetrical breakout in December and with RSI printing bullish at 64.00,
prices could rise to NZD 2000 in the near term.
XAU/NZD, however, could revisit levels below NZD 1,900 if the RBNZ sounds less dovish than expected next week.
Gold in CNY terms
XAU/CNY is currently trading at CNY 8,865. Its monthly charting is flashing a classic bullish continuation pattern.
XAU/CNY monthly chart
The pennant breakout coupled with ascending 5- and 10-week MAs and RSI biased bullish above 60.00 indicates scope for a test of highs near CNY 9,200 clocked on July 20. Again, bullish pressures would weaken if the yellow metal finds acceptance under the ascending 10-month MA, currently at CNY 8,481.
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