Global macro overview for 17/05/2016:
The Chinese data regarding industrial production, retail sales and investment disappointed investors worldwide. The National Bureau of Statistics revealed that industrial output increased only 6.0% in April, down from 6.8% in March, way below the expected gain of 6.6%. Retail sales increased 10.1% in April , which was again lower than 10.5% in March. Moreover, fixed-asset investment in urban areas grew by 10.5% on the quarterly basis, less than the 10.7% expected figure. In conclusion, despite the aggressive easy-money policy these undershoots might cause a concern about future prosperity of the Chinese economy as it tries to fight with significant headwinds. In a situation like this, investors might be more willing to invest in safe-haven assets like gold, rather than risky assets like stocks.
This is why we will take a look at the technical picture of Gold after the data release. On the daily time frame we can clearly see that Gold has been rallying more than $250 since December 2015, and the bulls are in control over this market. The growing bearish divergence, however, might cause a temporary correction in this market. The main important support at the orange rectangle area is the key level for bulls after the golden trend line is violated.
