The obvious overbought sign of Stochastic indicator-secondary image- revives the fact that metal is still gathering the momentum it needs to reach the scientific technical objective of the bearish harmonic AB=CD pattern at 38.2% Fibonacci level of the CD leg. In the interim, a bearish channel is dominating the movements for the time being. Hence, we hold onto our bearish predictions over intraday basis. A break of 1332.00 is needed to confirm this scenario.
The trading range for today is among the key support at 1307.00 and key resistance now at 1365.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain intact.
Support 1332.00 1325.00 1320.00 1314.00 1307.00
Resistance 1345.00 1348.00 1352.00 1355.00 1365.00
Recommendation Based on the charts and explanations above our opinion is, selling gold with a breakout below1332.00 targeting 1299.00 and stop loss above 1355.00 might be appropriate.
Oct 29, 2010
Oct 28, 2010
News and gold strategy
Gold Upward Momentum Continues for Fourth Straight Session
Gold Ended Sharply Lower: “Sell the News” Kicks In as QE2 Approaches Closer
28 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1339 1354 1364
1st support 2nd support 3rd support
Today’s support US$ 1315 1304 1290
Today’s pivot point US$ 1329
The Day’s Story:
Spot gold ended sharply lower as U.S dollar continued to bounce back from its recent losses and pace of profit taking picked up after metal’s sharp gains in recent months. Most of the losses in precious metal were due to dollar’s strength as market has started to realise that QE2 may not be as large as previously thought and FED may employ its next monetary easing in a way that it stretched over several months with lot less amount compared to QE1 of 2 Trillion dollars. This view was confirmed by a report in Walls Street Journal that the Fed Reserve could be more cautious than previously expected in its stance on quantitative easing. Gold is still up by 22% this year and looks set to record its tenth annual gain and despite recent U.S dollar short covering rally, gold’s medium to long term outlook remain bullish according to many market analysts.
Major U.S. stock indices were mixed at the end of their Wednesday session with DOW and S&P500 marginally down while NASDAQ ended in green mainly due to some positive earnings from Tech sector. Stronger than positive earnings from Broadcom Corp, JDA Software Inc. and Compellent Technologies Inc. helped NASDAQ to rally in the final hours of trading and lead the broader market to retrace from its low points before the end of the session. Better than expected data in which U.S manufactured durable goods orders rose by 3.3% against expected 2.5% and September new home sales rose by 6.6% against market expectation of 4.2% could not convince traders to buy stocks. The reason for sell off was mainly because of market tamping down its expectations of next week’s QE2 announcement. Analysts also believe various markets have gone up too far too quick in recent weeks at the back of the news of new stimulus package and much of it have already been priced in and market is due for a healthy correction as a result. Oil prices suffered as data revealed that U.S oil inventories rose by 5 million barrels. Declines in Crude Oil also affected the commodities across the board. In Europe stocks also ended lower for second day in a row mainly due to the weakness in the mining sector.
U.S dollar stole the show once again in yesterday’s trading as it continued to bounce back after sharp losses in recent months as market expects much smaller stimulus package in next week’s FED meeting than its earlier
expectations. Better than expected U.S home-sale report also lifted the dollar index up later in the U.S session. Despite recent gains by greenback, it’s near term technical outlook remains bearish and that is a bullish factor for price of gold which moves in opposite direction to dollar due to their inverse correlation relationship as a weaker dollar makes dollar denominated assets more appealing to holder of other currencies. Gold losses were mainly due to dollar gains in yesterday’s trading although some profit taking also contributed to the demise as traders locked their profits after strong gains in recent months. Gold has been consolidating at current levels for last few sessions and expect sideways movement until FED releases details about much anticipated fresh round of monetary easing package. U.S Q3 GDP is to be released on Friday and that could move the prices of U.S dollar and Gold as a result, in which direction will largely depend on the data and market interpretation to those numbers. Further declines could be expected if gold manages to break below $1314 level until then but $1300 level will provide a strong support to gold prices at least for now.
Gold price came under selling pressure right from the start after peaking to its intraday high of $1343.4 very early in the session. Gold quickly gave away its minor gains during Asian session and fell deep into red territory during Asian trading hours. Gold found some support early during European session and pared some of its losses. Gold extended its losses soon after mid European session and just before the U.S economic data filtered in before markets in U.S opened for their trading day. Yellow metal was not favored with North American market open and fell deeper to its intraday low of $1318.8 an ounce in the morning session of U.S trade. Gold however, managed to erase some of its intraday losses during remainder of U.S session and closed at $1324.9 an ounce for the day.
Other Metals:
Silver futures for December delivery closed down 43.0 cent to $23.40 an ounce on Wednesday.
Platinum futures for January delivery fell $25.90 to $1,678.10 an ounce on NYMEX.
Palladium futures for December delivery fell $6.30 to $619.15 an ounce.
December N.Y. Copper closed down 9 cent $3.77 a pound on Wednesday.
Gold (News and Views):
December Comex gold closed down $16.00 at $1,322.60 an ounce on Wednesday.
The London P.M. gold fixing was $1,324.50 on Wednesday compared to its previous P.M fixing $1,329.50.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings stood at 1299.177 tons on October 26 unchanged from previous day.
The dollar index, which measures the U.S. currency against a basket of six major currencies, rose 0.42 to 78.07 on Wednesday.
Crude Oil for October delivery rose by $0.61 to settle at $81.94 on Wednesday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
Assets of the metal in exchange-traded-products declined 0.28 metric ton to 2,096.13 tons yesterday, the eighth straight drop, according to data compiled by Bloomberg from 10 providers. Holdings are up 17 percent this year and reached a record 2,104.65 tons on Oct. 14.
Analysts cited metals weakness related to concerns among U.S. regulators about market manipulation. The U.S. Commodity Futures Trading Commission said there had been attempts to influence silver prices, but gave no detail on the status of a probe into price manipulation in silver that started in 2008. (Reuters)
Factors Affecting Gold Price Yesterday:
The greenback is holding strong, and there is little other news (for gold)," said Andrey Kryuchenkov, analyst at VTB Capital.
U.S. GDP data on Friday will be key for the dollar and consequently for gold, he said, "but it is really down to the FOMC".
Global equities and dollar-based commodities are undergoing a collective profit-taking retracement in direct correlation to a bounce in the U.S. dollar against most other currencies, says Janet Mirasola, managing director of metals trading with R.J. O'Brien & Associates. “Much debate is likely to follow as to why the dollar has regained friends, but the fact is that the ‘short’ was both crowded and fashionable and had run its fundamental course. A corrective bounce should not be a surprise to any investors who understand the risk of market action over-extending reality. Commodities are swooning as profit-takers start to look now towards month-end and all-important U.S. GDP data due on Friday.” Gold, copper and crude oil are all softer, with psychological support levels of $1,300 an ounce, $8,000 per metric ton and $80 a barrel, respectively.
"Despite better than forecast consumer confidence and Richmond manufacturing data, the recovering dollar weighed on risk sentiment over the course of the day as U.S. equities swung between positive and negative," Fast Markets research analyst James Moore said in a daily note.
“The strength in the dollar is causing people to sell first and ask questions later,” said Adam Klopfenstein, senior marketing strategist at Lind Waldock in Chicago.
Wall Street may have “overplayed” its expectations of quantitative easing judging by Wednesday’s swift negative reaction to The Wall Street Journal report, analysts at MF Global said in a note to clients Wednesday.
The expectation of a more gradualist approach on quantitative easing by the Fed has led to this pullback," said James Steel, chief commodity analyst at HSBC.
Gold Future Outlook:
A report in the Wall Street Journal, suggesting that U.S. quantitative easing may not be as great as some expected, is playing a role in the bounce in the U.S. dollar, which in turn is behind some of the weakness in commodities such as crude oil and metals, says MF Global analyst Edward Meir. The Journal article suggests
that the Fed is likely to unveil a Treasury-bond purchase worth a few hundred billion dollars spread out over several months, far less than nearly $2 trillion during the financial crisis. “Judging from the negative reaction thus far, it is fair to assume that prevailing quantitative-easing parameters may have been overplayed in recent weeks, as both the amount and the phased-in nature of the current proposal is falling somewhat short of expectations,” Meir says. He notes that MF Global is not surprised by the turn of events, after cautioning that a “sell-the-news” type of action may have been imminent. “We suspect that the selling may have somewhat more room to run now that it has started, but just as we saw in the aftermath of the China rate hike, the correction may prove to be relatively short-lived.”
“The longer-term question will be on how much of the Fed’s action has already been priced in,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago.
“With the Fed poised to print more money, we expect dips will be viewed favorably by investors, with longer-term concerns about inflation and debasing of fiat currencies,” said James Moore, an analyst at TheBullionDesk.com in London.
Earlier, bullion received a boost after a newspaper run by China's Ministry of Commerce said the country should significantly boost state gold reserves to a level equal to that held by the United States, citing a local researcher.
"While the implications of potential QE and its size have monopolized market attention, the China report reminds us that the current mood amongst central banks, particularly in Asia, is to increase exposures to gold," UBS said in a note.
Chart support could be found at $1,319, around spot gold's three-month rising trendline, said Rick Bensignor, chief market analyst at Execution Noble. Prices are further supported around $1,313-14, at the bottom of the Bollinger Band, he said.
Technical Analysis (by Jim Wyckoff):
Technically, gold bulls are fading on a near-term basis and need to show some good price strength yet this week to begin to repair the near-term chart damage that was inflicted last week. Bulls do still have the overall near-term and longer-term technical advantage.
Bulls' next near-term upside technical objective is to produce a close in December Comex futures above solid technical resistance at this week's high of $1,349.50.
Bears' next near-term downside price objective is closing prices below major psychological support at $1,300.00.
First resistance is seen at $1,330.00 and then at $1,340.00.
Support is seen at Wednesday's low of $1,318.60 and then at last week's low of $1,315.60.
Wyckoff's Market Rating: 6.5.
Daily Gold and Silver Expected Range:
Gold: US$1308- $1344
Silver: US$23.12 - $24.05
Chart of the Day:
Chart below shows gold prices finding support at rising trendline. A breach of these level will call for 1305-08 level, at lower Bollinger band.
RSI is sitting at 50 level and have much room to travel south before entering to oversold conditions.
MACD study which favored the bullish move until few days ago and was well established in bullish zone indicates a trend reversal and heading towards Zero line. Trend reversal can also been seen by reduced histograms.
Slow Stochastics which broke down badly and gave false signals while at the top of the trend in last few months are approaching towards oversold territory. Stochastics which are more sensitive to price action than RSI and rather lagging MACD indicator appears to signal that current correction may be over soon painting a rather conflicting picture.
Keep an eye on dollar move for further clues as inverse correlation between gold and dollar has been te strongest in a year.
Gold Ended Sharply Lower: “Sell the News” Kicks In as QE2 Approaches Closer
28 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1339 1354 1364
1st support 2nd support 3rd support
Today’s support US$ 1315 1304 1290
Today’s pivot point US$ 1329
The Day’s Story:
Spot gold ended sharply lower as U.S dollar continued to bounce back from its recent losses and pace of profit taking picked up after metal’s sharp gains in recent months. Most of the losses in precious metal were due to dollar’s strength as market has started to realise that QE2 may not be as large as previously thought and FED may employ its next monetary easing in a way that it stretched over several months with lot less amount compared to QE1 of 2 Trillion dollars. This view was confirmed by a report in Walls Street Journal that the Fed Reserve could be more cautious than previously expected in its stance on quantitative easing. Gold is still up by 22% this year and looks set to record its tenth annual gain and despite recent U.S dollar short covering rally, gold’s medium to long term outlook remain bullish according to many market analysts.
Major U.S. stock indices were mixed at the end of their Wednesday session with DOW and S&P500 marginally down while NASDAQ ended in green mainly due to some positive earnings from Tech sector. Stronger than positive earnings from Broadcom Corp, JDA Software Inc. and Compellent Technologies Inc. helped NASDAQ to rally in the final hours of trading and lead the broader market to retrace from its low points before the end of the session. Better than expected data in which U.S manufactured durable goods orders rose by 3.3% against expected 2.5% and September new home sales rose by 6.6% against market expectation of 4.2% could not convince traders to buy stocks. The reason for sell off was mainly because of market tamping down its expectations of next week’s QE2 announcement. Analysts also believe various markets have gone up too far too quick in recent weeks at the back of the news of new stimulus package and much of it have already been priced in and market is due for a healthy correction as a result. Oil prices suffered as data revealed that U.S oil inventories rose by 5 million barrels. Declines in Crude Oil also affected the commodities across the board. In Europe stocks also ended lower for second day in a row mainly due to the weakness in the mining sector.
U.S dollar stole the show once again in yesterday’s trading as it continued to bounce back after sharp losses in recent months as market expects much smaller stimulus package in next week’s FED meeting than its earlier
expectations. Better than expected U.S home-sale report also lifted the dollar index up later in the U.S session. Despite recent gains by greenback, it’s near term technical outlook remains bearish and that is a bullish factor for price of gold which moves in opposite direction to dollar due to their inverse correlation relationship as a weaker dollar makes dollar denominated assets more appealing to holder of other currencies. Gold losses were mainly due to dollar gains in yesterday’s trading although some profit taking also contributed to the demise as traders locked their profits after strong gains in recent months. Gold has been consolidating at current levels for last few sessions and expect sideways movement until FED releases details about much anticipated fresh round of monetary easing package. U.S Q3 GDP is to be released on Friday and that could move the prices of U.S dollar and Gold as a result, in which direction will largely depend on the data and market interpretation to those numbers. Further declines could be expected if gold manages to break below $1314 level until then but $1300 level will provide a strong support to gold prices at least for now.
Gold price came under selling pressure right from the start after peaking to its intraday high of $1343.4 very early in the session. Gold quickly gave away its minor gains during Asian session and fell deep into red territory during Asian trading hours. Gold found some support early during European session and pared some of its losses. Gold extended its losses soon after mid European session and just before the U.S economic data filtered in before markets in U.S opened for their trading day. Yellow metal was not favored with North American market open and fell deeper to its intraday low of $1318.8 an ounce in the morning session of U.S trade. Gold however, managed to erase some of its intraday losses during remainder of U.S session and closed at $1324.9 an ounce for the day.
Other Metals:
Silver futures for December delivery closed down 43.0 cent to $23.40 an ounce on Wednesday.
Platinum futures for January delivery fell $25.90 to $1,678.10 an ounce on NYMEX.
Palladium futures for December delivery fell $6.30 to $619.15 an ounce.
December N.Y. Copper closed down 9 cent $3.77 a pound on Wednesday.
Gold (News and Views):
December Comex gold closed down $16.00 at $1,322.60 an ounce on Wednesday.
The London P.M. gold fixing was $1,324.50 on Wednesday compared to its previous P.M fixing $1,329.50.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings stood at 1299.177 tons on October 26 unchanged from previous day.
The dollar index, which measures the U.S. currency against a basket of six major currencies, rose 0.42 to 78.07 on Wednesday.
Crude Oil for October delivery rose by $0.61 to settle at $81.94 on Wednesday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
Assets of the metal in exchange-traded-products declined 0.28 metric ton to 2,096.13 tons yesterday, the eighth straight drop, according to data compiled by Bloomberg from 10 providers. Holdings are up 17 percent this year and reached a record 2,104.65 tons on Oct. 14.
Analysts cited metals weakness related to concerns among U.S. regulators about market manipulation. The U.S. Commodity Futures Trading Commission said there had been attempts to influence silver prices, but gave no detail on the status of a probe into price manipulation in silver that started in 2008. (Reuters)
Factors Affecting Gold Price Yesterday:
The greenback is holding strong, and there is little other news (for gold)," said Andrey Kryuchenkov, analyst at VTB Capital.
U.S. GDP data on Friday will be key for the dollar and consequently for gold, he said, "but it is really down to the FOMC".
Global equities and dollar-based commodities are undergoing a collective profit-taking retracement in direct correlation to a bounce in the U.S. dollar against most other currencies, says Janet Mirasola, managing director of metals trading with R.J. O'Brien & Associates. “Much debate is likely to follow as to why the dollar has regained friends, but the fact is that the ‘short’ was both crowded and fashionable and had run its fundamental course. A corrective bounce should not be a surprise to any investors who understand the risk of market action over-extending reality. Commodities are swooning as profit-takers start to look now towards month-end and all-important U.S. GDP data due on Friday.” Gold, copper and crude oil are all softer, with psychological support levels of $1,300 an ounce, $8,000 per metric ton and $80 a barrel, respectively.
"Despite better than forecast consumer confidence and Richmond manufacturing data, the recovering dollar weighed on risk sentiment over the course of the day as U.S. equities swung between positive and negative," Fast Markets research analyst James Moore said in a daily note.
“The strength in the dollar is causing people to sell first and ask questions later,” said Adam Klopfenstein, senior marketing strategist at Lind Waldock in Chicago.
Wall Street may have “overplayed” its expectations of quantitative easing judging by Wednesday’s swift negative reaction to The Wall Street Journal report, analysts at MF Global said in a note to clients Wednesday.
The expectation of a more gradualist approach on quantitative easing by the Fed has led to this pullback," said James Steel, chief commodity analyst at HSBC.
Gold Future Outlook:
A report in the Wall Street Journal, suggesting that U.S. quantitative easing may not be as great as some expected, is playing a role in the bounce in the U.S. dollar, which in turn is behind some of the weakness in commodities such as crude oil and metals, says MF Global analyst Edward Meir. The Journal article suggests
that the Fed is likely to unveil a Treasury-bond purchase worth a few hundred billion dollars spread out over several months, far less than nearly $2 trillion during the financial crisis. “Judging from the negative reaction thus far, it is fair to assume that prevailing quantitative-easing parameters may have been overplayed in recent weeks, as both the amount and the phased-in nature of the current proposal is falling somewhat short of expectations,” Meir says. He notes that MF Global is not surprised by the turn of events, after cautioning that a “sell-the-news” type of action may have been imminent. “We suspect that the selling may have somewhat more room to run now that it has started, but just as we saw in the aftermath of the China rate hike, the correction may prove to be relatively short-lived.”
“The longer-term question will be on how much of the Fed’s action has already been priced in,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago.
“With the Fed poised to print more money, we expect dips will be viewed favorably by investors, with longer-term concerns about inflation and debasing of fiat currencies,” said James Moore, an analyst at TheBullionDesk.com in London.
Earlier, bullion received a boost after a newspaper run by China's Ministry of Commerce said the country should significantly boost state gold reserves to a level equal to that held by the United States, citing a local researcher.
"While the implications of potential QE and its size have monopolized market attention, the China report reminds us that the current mood amongst central banks, particularly in Asia, is to increase exposures to gold," UBS said in a note.
Chart support could be found at $1,319, around spot gold's three-month rising trendline, said Rick Bensignor, chief market analyst at Execution Noble. Prices are further supported around $1,313-14, at the bottom of the Bollinger Band, he said.
Technical Analysis (by Jim Wyckoff):
Technically, gold bulls are fading on a near-term basis and need to show some good price strength yet this week to begin to repair the near-term chart damage that was inflicted last week. Bulls do still have the overall near-term and longer-term technical advantage.
Bulls' next near-term upside technical objective is to produce a close in December Comex futures above solid technical resistance at this week's high of $1,349.50.
Bears' next near-term downside price objective is closing prices below major psychological support at $1,300.00.
First resistance is seen at $1,330.00 and then at $1,340.00.
Support is seen at Wednesday's low of $1,318.60 and then at last week's low of $1,315.60.
Wyckoff's Market Rating: 6.5.
Daily Gold and Silver Expected Range:
Gold: US$1308- $1344
Silver: US$23.12 - $24.05
Chart of the Day:
Chart below shows gold prices finding support at rising trendline. A breach of these level will call for 1305-08 level, at lower Bollinger band.
RSI is sitting at 50 level and have much room to travel south before entering to oversold conditions.
MACD study which favored the bullish move until few days ago and was well established in bullish zone indicates a trend reversal and heading towards Zero line. Trend reversal can also been seen by reduced histograms.
Slow Stochastics which broke down badly and gave false signals while at the top of the trend in last few months are approaching towards oversold territory. Stochastics which are more sensitive to price action than RSI and rather lagging MACD indicator appears to signal that current correction may be over soon painting a rather conflicting picture.
Keep an eye on dollar move for further clues as inverse correlation between gold and dollar has been te strongest in a year.
Gold Forecast
Gold slipped sharply downwards, closing below 23.6% Fibonacci level of the CD leg for the efficient bearish harmonic AB=CD pattern as seen on the provided chart. The bearish channel of the descending actions from the historical high still dominates the metal's trend. In result, the way is cleared towards 38.2% of CD leg at 1299.00 and we keep our bearish anticipations unchanged over intraday basis. AROON shows a clear negative sign, supporting our outlook.
The trading range for today is among the key support at 1291.00 and key resistance now at 1355.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain
Support 1320.00 1314.00 1307.00 1299.00 1294.00
Resistance 1332.00 1339.00 1345.00 1348.00 1355.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1332.00 targeting 1299.00 and stop loss above 1355.00 might be appropriate.
The trading range for today is among the key support at 1291.00 and key resistance now at 1355.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain
Support 1320.00 1314.00 1307.00 1299.00 1294.00
Resistance 1332.00 1339.00 1345.00 1348.00 1355.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1332.00 targeting 1299.00 and stop loss above 1355.00 might be appropriate.
News and gold strategy
Gold Flat as Dollar Rebound Capped Gains
27 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1346 1353 1362
1st support 2nd support 3rd support
Today’s support US$ 1331 1322 1315
Today’s pivot point US$ 1337
The Day’s Story:
Spot Gold ended flat on Tuesday after falling down by more than 1% earlier during the session. Gold came under pressure at the back of strong rebound in U.S dollar which rose against basket of six major currencies. Gold recovered from its earlier losses as bargain hunters once again came into rescue and took benefit of lower prices maintaining “buy at dip” psychology. Gold which has risen to record level for 17 times in last seven weeks has been in consolidation as market awaits result of FED’s next week meeting and details of expected fresh round of Quantitative Easing. The speculation has caused a significant downside pressure for Greenback as more money in circulation will depreciate the currency value boosting the demand for alternative assets such as gold. Most of QE2 news has already been priced in the bullion and many analysts expect U.S dollar to stabilize in near future.
Major U.S. stock indices ended flat on Tuesday as stronger than expected 3rd quarter results from Ford Motors and Coach along with better than expected consumer confidence numbers outweighed the losses in Material sector. Before the market open, it was reported that the S&P/Case-Shiller 20-city August home price index increased by 1.7% from August 2009, which was below the 2.1% growth predicted by economists. The market trading at six-month highs moved sideways, is looking ahead to next week’s heavy schedule of long-awaited events: FED meeting in which the central bank is expected to announce a fresh round of monetary easing measures, midterm congressional elections and October Non-Farm payroll report. Recently some positive economic data has surprised the traders and improved economic outlook has calmed fears of double dip recession. Much depends on next week’s Job report because market argues despite better economic data; job market has been on the slide. Unless labour market improves economy cannot be considered on the path to a sustained recovery. If economy starts showing true signs of improvement, demand for safe haven assets takes a hit and gold will be its biggest victim as economic stability takes the shine away from precious metal. Main European markets edged lower, weighed by disappointment with earnings from Swiss bank UBS AG.
U.S dollar stole the show in yesterday’s trading as it bounced back from moderate losses a day earlier and rose
by 0.7% against basket of six major currencies. A stronger dollar is usually a negative for commodities such as gold because it makes them more expensive to holders of other currencies, diminishing their investment appeal. Gold-dollar inverse correlation was slightly damaged yesterday as a significant rise in greenback could not hurt gold prices although it did put a lid on bullion’s gains. Gold recovery was mainly due to “Buy at Dip” mentality as bargain hunters once again came into play. According to Newswire report physical demand for bullion remains strong in Asian countries which has also limited any downside in gold prices. As mentioned above, analysts believe greenback may stabilize in near term and that could trigger a deep correction in gold prices due to negative correlation between the two which has been at its strongest level in a year. We will have a clear picture of gold’s next move after FED’s next meeting. Until then expect a sideways movement with prices trading mainly in the range of 1300-1360.
Gold price started its Tuesday session with a spike to intraday high of $1343.5 an ounce but quickly gave away its slight gains and headed down towards south. Gold remained under selling pressure throughout Asian session and continued to extend losses during earlier European session. Gold fell to its intraday low of $1327.9 an ounce just before markets in North America started their trading day. Bullion found some support in early hours of U.S session and pared almost all its losses in the final session of the day. Gold finished its day a tad above its previous close of $1339.5 at $1340.1 an ounce.
Other Metals:
Silver futures for December delivery closed up 29.0 cent to $23.83 an ounce on Tuesday.
Platinum futures for January delivery rose by $7.00 to $1,704.00 an ounce on NYMEX.
Palladium futures for December delivery rose by $16.65 to $625.45 an ounce.
December N.Y. Copper closed up 1 cent $3.87 a pound on Tuesday.
Gold (News and Views):
December Comex gold closed down $0.30 at $1,338.60 an ounce on Tuesday.
The London P.M. gold fixing was $1,329.50 on Tuesday compared to its previous P.M fixing $1,337.50.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings stood at 1299.177 tons on October 26 unchanged from previous day.
The dollar index, which measures the U.S. currency against a basket of six major currencies, rose 0.52 to 77.65 on Tuesday.
Crude Oil for October delivery rose by $0.03 to settle at $82.55 on Tuesday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
Indian jewelry demand appears to be holding up even with gold at historically high prices, says a research note from Commerzbank. Analysts cite reports from the Bombay Bullion Association saying that imports into the key consuming nation of India could top 40 tons in October and that imports for the full year could
reach last year’s level of 340. “Jewelry demand is evidently accustomed to the higher price level,” Commerzbank says. “Slight drops in prices are being used as buying opportunities even at the current high level.” This is reflected in a strong demand for gold in India in the run-up to the early-November Diwali festival, the bank says.
Gold assets in exchange-traded products fell 1.63 metric tons to 2,096.41 tons yesterday, the seventh straight decline, according to data compiled by Bloomberg from 10 providers.
Factors Affecting Gold Price Yesterday:
A stronger tone in the dollar exerted some pressure on gold and silver in London trading, say analysts with GoldCore. “Physical demand remains robust with buyers continuing to accumulate on the dips. With monetary easing set to continue and indeed deepen in the coming months, this is likely to continue,” GoldCore says.
That gold and other commodities managed to at times move higher on a day the dollar is stronger sent a very powerful message about demand, said Richard Ross, a technical analyst at Auerbach & Grayson in New York.
“There’s general demand for commodities, the story is more than the dollar” even though the U.S. currency remains a critical aspect of commodity price movements, he said.
Frank McGhee, head precious metals trader of Chicago-based Integrated Brokerage Services, said gold's positive turnaround was aided by technical buying as the metal shrugged off a stronger dollar.
"At this point, it's all technicals. Gold had originally gotten back to trade lock-step with the euro/dollar, but that was disconnected after gold did not confirm a breakdown ...," McGhee said.
There was consumer confidence data ... it failed to weaken the dollar," said analyst Eugen Weinberg of Commerzbank. "It is maybe helping a little bit as well -- otherwise gold is vulnerable to further profit taking."
In a daily note, EverBank World Markets president Chuck Butler surmised that Tuesday's dollar gain could be attributable to U.S. traders not being pleased with the G20 results on the premises that the FOMC may not carry out as much quantitative easing as the market has expected. "So why are the U.S. traders thinking this way, when the foreign markets traders and me believe the amount of the QE will be larger than $1 trillion? ... I really don't have an answer for you on why here in the U.S. traders are buying dollars."
Gold Future Outlook:
Newsletter writer Dennis Gartman says gold’s recent correction has taken the metal from “over-extended back toward long-term technical health.” He describes himself as remaining “steadfastly bullish of gold in non-U.S. dollar terms.” He describes silver’s fundamentals are “demonstrably more powerful” than those for gold, but adds that he tends to focus on gold due to silver’s volatility. “But can we imagine why one might wish to be long of silver as well as long of gold? Of course we can, and we shall simply suggest that owning silver in sterling terms is as wise as owning gold in those same terms; the volatility is actually reduced and the trend is perhaps even more clearly defined.”
Goldcore puts chart support for spot gold at $1,317 an ounce, with resistance at $1,348 and $1,385.
"At the moment this (QE) is the most important factor," said Commerzbank's Weinberg. "By now, it should have been priced in to a greater extent. At the moment the market is buying the rumor and I wouldn't be surprised if it sells the fact when it comes."
The gold rally has “gone too far, too fast,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago. “Such breakouts are usually indicative of a market engine that surges forward on its last fumes before eventually exhausting its fuel supply.”
Earlier, gold rose as much as 0.4 percent on bets the greenback will resume a slide, said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.
“Metal traders believe the dollar is going to continue downward, and they’re positioning for the outcome after the Fed meeting,” Lesh said. “The dollar is inherently weak, and so far, we’ve had a very minor corrective bounce. The trend hasn’t changed by any means.”
Technical Analysis (by Jim Wyckoff):
From an important technical perspective, December gold futures closed nearer the session high Tuesday. Bulls need to show some good price strength this week to repair the near-term chart damage that was inflicted last week. Bulls do still have the overall near-term and longer-term technical advantage.
Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at $1,366.00.
Bears' next near-term downside price objective is closing prices below major psychological support at $1,300.00.
First resistance is seen at Tuesday's high of $1,343.80 and then at this week's high of $1,349.50.
Support is seen at Tuesday's low of $1,328.10 and then at $1,325.00.
Wyckoff's Market Rating: 7.0.
Daily Gold and Silver Expected Range:
Gold: US$1318- $1358
Silver: US$23.05 - $24.10
Chart of the Day (by Phil Smith):
Gold has pulled back a bit from its very overbought condition.
Gold had accelerated away from the uptrend line but then bounced nicely off the Fibonacci Projection target of 1,378 we drew on a while ago. See chart two. The target for this correction is 1,293 as a first stop.
Turnover has come down and now the MACD on the daily has actually crossed to the downside so we could be into a new intermediate trend down.
The rise has, until now, been backed up by the MACD study but the Slow Stochastic broke down badly and
gave us some false signals.
The correlations for gold are actually normalizing at the moment but this may be temporary. Nevertheless the usual negative correlation with the dollar is back in place and the dollar is moving steadily to the downside.
I’m still watching for the beginnings of a large topping pattern at these levels. When the turnover in the market falls there is likely a lot of ‘air’ under this price. Watch the turnover very carefully.
27 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1346 1353 1362
1st support 2nd support 3rd support
Today’s support US$ 1331 1322 1315
Today’s pivot point US$ 1337
The Day’s Story:
Spot Gold ended flat on Tuesday after falling down by more than 1% earlier during the session. Gold came under pressure at the back of strong rebound in U.S dollar which rose against basket of six major currencies. Gold recovered from its earlier losses as bargain hunters once again came into rescue and took benefit of lower prices maintaining “buy at dip” psychology. Gold which has risen to record level for 17 times in last seven weeks has been in consolidation as market awaits result of FED’s next week meeting and details of expected fresh round of Quantitative Easing. The speculation has caused a significant downside pressure for Greenback as more money in circulation will depreciate the currency value boosting the demand for alternative assets such as gold. Most of QE2 news has already been priced in the bullion and many analysts expect U.S dollar to stabilize in near future.
Major U.S. stock indices ended flat on Tuesday as stronger than expected 3rd quarter results from Ford Motors and Coach along with better than expected consumer confidence numbers outweighed the losses in Material sector. Before the market open, it was reported that the S&P/Case-Shiller 20-city August home price index increased by 1.7% from August 2009, which was below the 2.1% growth predicted by economists. The market trading at six-month highs moved sideways, is looking ahead to next week’s heavy schedule of long-awaited events: FED meeting in which the central bank is expected to announce a fresh round of monetary easing measures, midterm congressional elections and October Non-Farm payroll report. Recently some positive economic data has surprised the traders and improved economic outlook has calmed fears of double dip recession. Much depends on next week’s Job report because market argues despite better economic data; job market has been on the slide. Unless labour market improves economy cannot be considered on the path to a sustained recovery. If economy starts showing true signs of improvement, demand for safe haven assets takes a hit and gold will be its biggest victim as economic stability takes the shine away from precious metal. Main European markets edged lower, weighed by disappointment with earnings from Swiss bank UBS AG.
U.S dollar stole the show in yesterday’s trading as it bounced back from moderate losses a day earlier and rose
by 0.7% against basket of six major currencies. A stronger dollar is usually a negative for commodities such as gold because it makes them more expensive to holders of other currencies, diminishing their investment appeal. Gold-dollar inverse correlation was slightly damaged yesterday as a significant rise in greenback could not hurt gold prices although it did put a lid on bullion’s gains. Gold recovery was mainly due to “Buy at Dip” mentality as bargain hunters once again came into play. According to Newswire report physical demand for bullion remains strong in Asian countries which has also limited any downside in gold prices. As mentioned above, analysts believe greenback may stabilize in near term and that could trigger a deep correction in gold prices due to negative correlation between the two which has been at its strongest level in a year. We will have a clear picture of gold’s next move after FED’s next meeting. Until then expect a sideways movement with prices trading mainly in the range of 1300-1360.
Gold price started its Tuesday session with a spike to intraday high of $1343.5 an ounce but quickly gave away its slight gains and headed down towards south. Gold remained under selling pressure throughout Asian session and continued to extend losses during earlier European session. Gold fell to its intraday low of $1327.9 an ounce just before markets in North America started their trading day. Bullion found some support in early hours of U.S session and pared almost all its losses in the final session of the day. Gold finished its day a tad above its previous close of $1339.5 at $1340.1 an ounce.
Other Metals:
Silver futures for December delivery closed up 29.0 cent to $23.83 an ounce on Tuesday.
Platinum futures for January delivery rose by $7.00 to $1,704.00 an ounce on NYMEX.
Palladium futures for December delivery rose by $16.65 to $625.45 an ounce.
December N.Y. Copper closed up 1 cent $3.87 a pound on Tuesday.
Gold (News and Views):
December Comex gold closed down $0.30 at $1,338.60 an ounce on Tuesday.
The London P.M. gold fixing was $1,329.50 on Tuesday compared to its previous P.M fixing $1,337.50.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings stood at 1299.177 tons on October 26 unchanged from previous day.
The dollar index, which measures the U.S. currency against a basket of six major currencies, rose 0.52 to 77.65 on Tuesday.
Crude Oil for October delivery rose by $0.03 to settle at $82.55 on Tuesday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
Indian jewelry demand appears to be holding up even with gold at historically high prices, says a research note from Commerzbank. Analysts cite reports from the Bombay Bullion Association saying that imports into the key consuming nation of India could top 40 tons in October and that imports for the full year could
reach last year’s level of 340. “Jewelry demand is evidently accustomed to the higher price level,” Commerzbank says. “Slight drops in prices are being used as buying opportunities even at the current high level.” This is reflected in a strong demand for gold in India in the run-up to the early-November Diwali festival, the bank says.
Gold assets in exchange-traded products fell 1.63 metric tons to 2,096.41 tons yesterday, the seventh straight decline, according to data compiled by Bloomberg from 10 providers.
Factors Affecting Gold Price Yesterday:
A stronger tone in the dollar exerted some pressure on gold and silver in London trading, say analysts with GoldCore. “Physical demand remains robust with buyers continuing to accumulate on the dips. With monetary easing set to continue and indeed deepen in the coming months, this is likely to continue,” GoldCore says.
That gold and other commodities managed to at times move higher on a day the dollar is stronger sent a very powerful message about demand, said Richard Ross, a technical analyst at Auerbach & Grayson in New York.
“There’s general demand for commodities, the story is more than the dollar” even though the U.S. currency remains a critical aspect of commodity price movements, he said.
Frank McGhee, head precious metals trader of Chicago-based Integrated Brokerage Services, said gold's positive turnaround was aided by technical buying as the metal shrugged off a stronger dollar.
"At this point, it's all technicals. Gold had originally gotten back to trade lock-step with the euro/dollar, but that was disconnected after gold did not confirm a breakdown ...," McGhee said.
There was consumer confidence data ... it failed to weaken the dollar," said analyst Eugen Weinberg of Commerzbank. "It is maybe helping a little bit as well -- otherwise gold is vulnerable to further profit taking."
In a daily note, EverBank World Markets president Chuck Butler surmised that Tuesday's dollar gain could be attributable to U.S. traders not being pleased with the G20 results on the premises that the FOMC may not carry out as much quantitative easing as the market has expected. "So why are the U.S. traders thinking this way, when the foreign markets traders and me believe the amount of the QE will be larger than $1 trillion? ... I really don't have an answer for you on why here in the U.S. traders are buying dollars."
Gold Future Outlook:
Newsletter writer Dennis Gartman says gold’s recent correction has taken the metal from “over-extended back toward long-term technical health.” He describes himself as remaining “steadfastly bullish of gold in non-U.S. dollar terms.” He describes silver’s fundamentals are “demonstrably more powerful” than those for gold, but adds that he tends to focus on gold due to silver’s volatility. “But can we imagine why one might wish to be long of silver as well as long of gold? Of course we can, and we shall simply suggest that owning silver in sterling terms is as wise as owning gold in those same terms; the volatility is actually reduced and the trend is perhaps even more clearly defined.”
Goldcore puts chart support for spot gold at $1,317 an ounce, with resistance at $1,348 and $1,385.
"At the moment this (QE) is the most important factor," said Commerzbank's Weinberg. "By now, it should have been priced in to a greater extent. At the moment the market is buying the rumor and I wouldn't be surprised if it sells the fact when it comes."
The gold rally has “gone too far, too fast,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago. “Such breakouts are usually indicative of a market engine that surges forward on its last fumes before eventually exhausting its fuel supply.”
Earlier, gold rose as much as 0.4 percent on bets the greenback will resume a slide, said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.
“Metal traders believe the dollar is going to continue downward, and they’re positioning for the outcome after the Fed meeting,” Lesh said. “The dollar is inherently weak, and so far, we’ve had a very minor corrective bounce. The trend hasn’t changed by any means.”
Technical Analysis (by Jim Wyckoff):
From an important technical perspective, December gold futures closed nearer the session high Tuesday. Bulls need to show some good price strength this week to repair the near-term chart damage that was inflicted last week. Bulls do still have the overall near-term and longer-term technical advantage.
Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at $1,366.00.
Bears' next near-term downside price objective is closing prices below major psychological support at $1,300.00.
First resistance is seen at Tuesday's high of $1,343.80 and then at this week's high of $1,349.50.
Support is seen at Tuesday's low of $1,328.10 and then at $1,325.00.
Wyckoff's Market Rating: 7.0.
Daily Gold and Silver Expected Range:
Gold: US$1318- $1358
Silver: US$23.05 - $24.10
Chart of the Day (by Phil Smith):
Gold has pulled back a bit from its very overbought condition.
Gold had accelerated away from the uptrend line but then bounced nicely off the Fibonacci Projection target of 1,378 we drew on a while ago. See chart two. The target for this correction is 1,293 as a first stop.
Turnover has come down and now the MACD on the daily has actually crossed to the downside so we could be into a new intermediate trend down.
The rise has, until now, been backed up by the MACD study but the Slow Stochastic broke down badly and
gave us some false signals.
The correlations for gold are actually normalizing at the moment but this may be temporary. Nevertheless the usual negative correlation with the dollar is back in place and the dollar is moving steadily to the downside.
I’m still watching for the beginnings of a large topping pattern at these levels. When the turnover in the market falls there is likely a lot of ‘air’ under this price. Watch the turnover very carefully.
gold and forex forecast
Crude Oil:
Support 81.35 80.80 80.30 79.50 79.00
Resistance 81.85 82.70 83.35 83.95 84.40
Recommendation Our morning expectation remains valid.
Gold:
Support 1325.00 1320.00 1314.00 1307.00 1299.00
Resistance 1339.00 1345.00 1348.00 1352.00 1355.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1339.00 targeting 1307.00 and stop loss above 1365.00 might be appropriate.
Silver:
Support 23.60 23.40 23.35 23.25 23.15
Resistance 23.85 23.95 24.15 24.30 24.40
Recommendation Our morning expectations remain valid.
Euro:
Support 1.3770 1.3725 1.3670 1.3630 1.3580
Resistance 1.3850 1.3890 1.3920 1.3980 1.4035
Recommendation Based on the charts and explanations above our opinion is selling the pair around 1.3850 targeting 1.3740 and stop loss above 1.3920, might be appropriate.
Great British Pound (GBP):
Support 1.5800 1.5725 1.5645 1.5620 1.5560
Resistance 1.5880 1.5940 1.6000 1.6040 1.6070
Recommendation Based on the charts and explanations above our opinion is selling the pair around 1.5880 targeting 1.5645 and stop loss above 1.6000, might be appropriate.
Support 81.35 80.80 80.30 79.50 79.00
Resistance 81.85 82.70 83.35 83.95 84.40
Recommendation Our morning expectation remains valid.
Gold:
Support 1325.00 1320.00 1314.00 1307.00 1299.00
Resistance 1339.00 1345.00 1348.00 1352.00 1355.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1339.00 targeting 1307.00 and stop loss above 1365.00 might be appropriate.
Silver:
Support 23.60 23.40 23.35 23.25 23.15
Resistance 23.85 23.95 24.15 24.30 24.40
Recommendation Our morning expectations remain valid.
Euro:
Support 1.3770 1.3725 1.3670 1.3630 1.3580
Resistance 1.3850 1.3890 1.3920 1.3980 1.4035
Recommendation Based on the charts and explanations above our opinion is selling the pair around 1.3850 targeting 1.3740 and stop loss above 1.3920, might be appropriate.
Great British Pound (GBP):
Support 1.5800 1.5725 1.5645 1.5620 1.5560
Resistance 1.5880 1.5940 1.6000 1.6040 1.6070
Recommendation Based on the charts and explanations above our opinion is selling the pair around 1.5880 targeting 1.5645 and stop loss above 1.6000, might be appropriate.
Oct 27, 2010
gold strategy
In the first subsidiary image, we can see how the bearish channel of the descending movements that started from the historical high around 1387.00 still dominates the movements. In the second subsidiary image, we can see a bearish candlestick formation over four hour interval under the pressure of SMA 50. Henceforth, we keep our negative outlook unchanged over intraday basis, supported by the efficient bearish harmonic AB=CD pattern. Fibonacci level of 38.2% for the CD leg at 1299.00 is under microscope for the time being.
The trading range for today is among the key support at 1307.00 and key resistance now at 1365.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain intact.
Support 1332.00 1325.00 1320.00 1314.00 1307.00
Resistance 1339.00 1345.00 1348.00 1352.00 1355.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1339.00 targeting 1307.00 and stop loss above 1365.00 might be appropriate.
The trading range for today is among the key support at 1307.00 and key resistance now at 1365.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain intact.
Support 1332.00 1325.00 1320.00 1314.00 1307.00
Resistance 1339.00 1345.00 1348.00 1352.00 1355.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1339.00 targeting 1307.00 and stop loss above 1365.00 might be appropriate.
Oct 26, 2010
News and gold strategy
Gold Upward Momentum Continues for Fourth Straight Session
Gold Ended with Moderate Gains but Well Off its Session High as Dollar Continued to Slide
26 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1350 1361 1373
1st support 2nd support 3rd support
Today’s support US$ 1327 1315 1305
Today’s pivot point US$ 1338
The Day’s Story:
Spot Gold rebounded on Monday after week of losses as G20 meeting failed to come up with a concrete decision over currency fluctuation. Gold was also boosted by bargain hunters as they benefited from dip in prices and U.S dollar weakness after last week’s gains. Gold was also favored as chances of QE2 are becoming more and more imminent in FED’s next meeting soon after November congressional elections according to market analysts although some may argue that it is going to be a gradual process unlike previous QE and that may support U.S dollar. The other argument is that most of it has already been factored in gold prices which means consolidation at current levels or further correction in coming weeks.
Major U.S. stock indices ended moderately higher extending the three weeks gains as stronger than expected corporation earnings continued to provide traders a reason to buy stocks. The other main driving forces behind the rise were weakening dollar boosting materials and industrial stocks and hopes for fresh round of monetary easing. The biggest economic news of the day was a surprise 10% jump in existing home sale, its highest in 28 years which capped precious metal gains as improved economic outlook reduces the safe haven demand for assets and pushed price below $1340 level. Gold quickly recovered some of its lost ground as Investors said the better-than-expected data did little to diminish expectations that the central bank will announce a new round of purchasing Treasuries, or quantitative easing. European stocks also extended their gains on improved economic outlook.
U.S dollar was the biggest loser on the day as it came under severe selling pressure right from the start as G20 Finance Ministers and Central bankers meeting failed to deliver any conclusive outcome for global currencies and did little to calm investors’ fears over currency devaluation which has helped gold peaking several times to uncharted territory in last 12 weeks. Dollar took a breather with positive housing numbers but could not land into positive territory due to strong bearish sentiments hovering the greenback at the moment. For now market seems to have been obsessed by fresh monetary easing measures and that’s the only thing you will hear everybody talking about. What comes to dollar rescue remains to be seen but a short covering rally from last
week may have some steam left in it and dollar may find some support at these levels which could trigger further correction in bullion prices due to their strong inverse correlation.
Gold started its Monday session with gains and continued to climb throughout Asian trading hours. Gold went quiet during later part of the Asian trading session but fresh round of buying pressure at the start of European session lifted the prices above $1340 level, peaking to its intraday high of $1349 an ounce during early EU trading hours. Gold however pared some of its gains and traded in a narrow trading range during rest of the European session until U.S housing data was released soon after U.S markets started their trading day. Strong housing numbers pushed prices close to $1330 level as an initial reaction to numbers but gold managed to regain most of its ground towards the end of the session. Gold finished its day with1% gains at $1339.5 an ounce gaining some of its 3.4%weekly losses back.
Other Metals:
Silver futures for December delivery closed up 43.0 cent to $23.53 an ounce on Monday.
Platinum futures for January delivery rose by $21.90 to $1,697.00 an ounce on NYMEX.
Palladium futures for December delivery rose by $17.70 to $608.80 an ounce.
December N.Y. Copper closed up 7 cents $3.86 a pound on Monday.
Gold (News and Views):
December Comex gold closed up $13.80 at $1,338.90 an ounce on Monday.
The London P.M. gold fixing was $1,337.50 on Monday compared to its previous P.M fixing $1,322.50.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings rose 17 tons to 1304.342 tons on October 15.
The dollar index, which measures the U.S. currency against a basket of six major currencies, fell 0.26 to 77.13 on Monday.
Crude Oil for October delivery rose by $0.61 to settle at $82.52 on Monday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
Money managers have reduced their long positions in gold futures however. They reduced their bets that prices will rise 6% in the week ended Oct. 19, and the long positions are at their lowest since August, the Commerzbank analysts said, citing data from the U.S. Commodity Futures Trading Commission released late Monday.
Factors Affecting Gold Price Yesterday:
The Group of 20 meeting should continue to provide support for gold, says Commerzbank. The metal is sharply higher so far Monday after foreign-exchange market participants took the meeting of finance ministers and central bankers as an OK to keep selling the U.S. currency. “The meeting of G20 finance ministers and head of central banks in South Korea has ended without any real results,” Commerzbank says. “While G20
members have made a commitment to ‘move towards more market-determined exchange rate systems and to refrain from competitive devaluation of currencies,’ a definition of this was not provided. Consequently, differences persist between individual countries as to what constitutes appropriate monetary and currency policy. Gold should therefore stay in investor demand.”
“Certainly, the dollar plays into it,” says Leonard Kaplan, president of Prospector Asset Management. “Certainly oil plays into it.” Some buy stops were likely triggered. “It’s volatile, and I expect more of the same,” Kaplan says.
"The G20's hardened stance towards exchange rates has been has been interpreted as dollar-negative and should now defer further talk of 'currency wars,' and with it the threat of concerted central bank action to stem the downward moves in the dollar and take the heat out of the fast appreciating emerging market currencies," RBC Wealth Management's senior vice president and financial consultant George Gero explained in a report.
“It’s starting to pause for a breather,” said Michael Hewson, a market analyst at CMC Markets in London. “It is looking a little bit stretched at the moment,” even though longer-term prospects are still favorable for gold, he added.
Gold Future Outlook:
Gold and Energy Advisor's James DiGeorgia said though the dollar is under pressure, it looks like it's beginning to consolidate. "There is long-term support at the 76 level. The dollar could consolidate here," he said in a report.
DiGeorgia added that consolidations can remain from one to three months. The driver of the next decline could come when the Fed begins its second round of quantitative easing, anticipated to begin in early November, he said.
It's a very bullish picture for gold," said Carl Firman, analyst at Virtual Metals.
"You have this prospective QE2, dollar weakness, inflation fears," he added. "After Christmas we're looking at possibly $1,400."
In a daily report, EverBank World Markets president Chuck Butler said he was surprised by the sell-off in gold and silver last week because he's been of the view that the widely talked about "currency war" would bolster the metals as they retained wealth and currencies went to zero. "Hmmm. Confusing," Butler said. "But confusion only leads to clarification. So just stick with the diversification plan, and you'll be able to ride out confusion that sets into the markets every now and then!"
“At current prices near $1,350, demand will likely pullback a bit, but should remain healthy” before the Diwali festival at the beginning of next month, Edel Tully, an analyst at UBS in London, said today in a report. “Physical demand at the levels we saw on Friday is usually an indicator that gold’s price trough is very near.”
Technical Analysis:
From an important technical perspective, December Comex gold futures on Monday saw a corrective upside bounce from last week's solid losses. Some near-term technical damage was inflicted last week as a 2.5-month-old uptrend on the daily bar chart was at least temporarily negated and prices produced a bearish weekly low close last Monday.
Bulls now need to show some good price strength this week to repair the near-term chart damage that was inflicted last week. Gold bulls do still have the overall near-term and longer-term technical advantage.
Bulls' next near-term upside technical objective is to produce a close December gold above solid technical resistance at $1,366.00.
Bears' next near-term downside price objective is closing prices below major psychological support at $1,300.00.
First resistance is seen at Monday's high of $1,349.50 and then at $1,360.00.
Support is seen at Monday's low of $1,329.30 and then at $1,325.00.
Wyckoff's Market Rating: 7.0.
Daily Gold and Silver Expected Range:
Gold: US$1318- $1358
Silver: US$23.05 - $24.10
Gold Ended with Moderate Gains but Well Off its Session High as Dollar Continued to Slide
26 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1350 1361 1373
1st support 2nd support 3rd support
Today’s support US$ 1327 1315 1305
Today’s pivot point US$ 1338
The Day’s Story:
Spot Gold rebounded on Monday after week of losses as G20 meeting failed to come up with a concrete decision over currency fluctuation. Gold was also boosted by bargain hunters as they benefited from dip in prices and U.S dollar weakness after last week’s gains. Gold was also favored as chances of QE2 are becoming more and more imminent in FED’s next meeting soon after November congressional elections according to market analysts although some may argue that it is going to be a gradual process unlike previous QE and that may support U.S dollar. The other argument is that most of it has already been factored in gold prices which means consolidation at current levels or further correction in coming weeks.
Major U.S. stock indices ended moderately higher extending the three weeks gains as stronger than expected corporation earnings continued to provide traders a reason to buy stocks. The other main driving forces behind the rise were weakening dollar boosting materials and industrial stocks and hopes for fresh round of monetary easing. The biggest economic news of the day was a surprise 10% jump in existing home sale, its highest in 28 years which capped precious metal gains as improved economic outlook reduces the safe haven demand for assets and pushed price below $1340 level. Gold quickly recovered some of its lost ground as Investors said the better-than-expected data did little to diminish expectations that the central bank will announce a new round of purchasing Treasuries, or quantitative easing. European stocks also extended their gains on improved economic outlook.
U.S dollar was the biggest loser on the day as it came under severe selling pressure right from the start as G20 Finance Ministers and Central bankers meeting failed to deliver any conclusive outcome for global currencies and did little to calm investors’ fears over currency devaluation which has helped gold peaking several times to uncharted territory in last 12 weeks. Dollar took a breather with positive housing numbers but could not land into positive territory due to strong bearish sentiments hovering the greenback at the moment. For now market seems to have been obsessed by fresh monetary easing measures and that’s the only thing you will hear everybody talking about. What comes to dollar rescue remains to be seen but a short covering rally from last
week may have some steam left in it and dollar may find some support at these levels which could trigger further correction in bullion prices due to their strong inverse correlation.
Gold started its Monday session with gains and continued to climb throughout Asian trading hours. Gold went quiet during later part of the Asian trading session but fresh round of buying pressure at the start of European session lifted the prices above $1340 level, peaking to its intraday high of $1349 an ounce during early EU trading hours. Gold however pared some of its gains and traded in a narrow trading range during rest of the European session until U.S housing data was released soon after U.S markets started their trading day. Strong housing numbers pushed prices close to $1330 level as an initial reaction to numbers but gold managed to regain most of its ground towards the end of the session. Gold finished its day with1% gains at $1339.5 an ounce gaining some of its 3.4%weekly losses back.
Other Metals:
Silver futures for December delivery closed up 43.0 cent to $23.53 an ounce on Monday.
Platinum futures for January delivery rose by $21.90 to $1,697.00 an ounce on NYMEX.
Palladium futures for December delivery rose by $17.70 to $608.80 an ounce.
December N.Y. Copper closed up 7 cents $3.86 a pound on Monday.
Gold (News and Views):
December Comex gold closed up $13.80 at $1,338.90 an ounce on Monday.
The London P.M. gold fixing was $1,337.50 on Monday compared to its previous P.M fixing $1,322.50.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings rose 17 tons to 1304.342 tons on October 15.
The dollar index, which measures the U.S. currency against a basket of six major currencies, fell 0.26 to 77.13 on Monday.
Crude Oil for October delivery rose by $0.61 to settle at $82.52 on Monday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
Money managers have reduced their long positions in gold futures however. They reduced their bets that prices will rise 6% in the week ended Oct. 19, and the long positions are at their lowest since August, the Commerzbank analysts said, citing data from the U.S. Commodity Futures Trading Commission released late Monday.
Factors Affecting Gold Price Yesterday:
The Group of 20 meeting should continue to provide support for gold, says Commerzbank. The metal is sharply higher so far Monday after foreign-exchange market participants took the meeting of finance ministers and central bankers as an OK to keep selling the U.S. currency. “The meeting of G20 finance ministers and head of central banks in South Korea has ended without any real results,” Commerzbank says. “While G20
members have made a commitment to ‘move towards more market-determined exchange rate systems and to refrain from competitive devaluation of currencies,’ a definition of this was not provided. Consequently, differences persist between individual countries as to what constitutes appropriate monetary and currency policy. Gold should therefore stay in investor demand.”
“Certainly, the dollar plays into it,” says Leonard Kaplan, president of Prospector Asset Management. “Certainly oil plays into it.” Some buy stops were likely triggered. “It’s volatile, and I expect more of the same,” Kaplan says.
"The G20's hardened stance towards exchange rates has been has been interpreted as dollar-negative and should now defer further talk of 'currency wars,' and with it the threat of concerted central bank action to stem the downward moves in the dollar and take the heat out of the fast appreciating emerging market currencies," RBC Wealth Management's senior vice president and financial consultant George Gero explained in a report.
“It’s starting to pause for a breather,” said Michael Hewson, a market analyst at CMC Markets in London. “It is looking a little bit stretched at the moment,” even though longer-term prospects are still favorable for gold, he added.
Gold Future Outlook:
Gold and Energy Advisor's James DiGeorgia said though the dollar is under pressure, it looks like it's beginning to consolidate. "There is long-term support at the 76 level. The dollar could consolidate here," he said in a report.
DiGeorgia added that consolidations can remain from one to three months. The driver of the next decline could come when the Fed begins its second round of quantitative easing, anticipated to begin in early November, he said.
It's a very bullish picture for gold," said Carl Firman, analyst at Virtual Metals.
"You have this prospective QE2, dollar weakness, inflation fears," he added. "After Christmas we're looking at possibly $1,400."
In a daily report, EverBank World Markets president Chuck Butler said he was surprised by the sell-off in gold and silver last week because he's been of the view that the widely talked about "currency war" would bolster the metals as they retained wealth and currencies went to zero. "Hmmm. Confusing," Butler said. "But confusion only leads to clarification. So just stick with the diversification plan, and you'll be able to ride out confusion that sets into the markets every now and then!"
“At current prices near $1,350, demand will likely pullback a bit, but should remain healthy” before the Diwali festival at the beginning of next month, Edel Tully, an analyst at UBS in London, said today in a report. “Physical demand at the levels we saw on Friday is usually an indicator that gold’s price trough is very near.”
Technical Analysis:
From an important technical perspective, December Comex gold futures on Monday saw a corrective upside bounce from last week's solid losses. Some near-term technical damage was inflicted last week as a 2.5-month-old uptrend on the daily bar chart was at least temporarily negated and prices produced a bearish weekly low close last Monday.
Bulls now need to show some good price strength this week to repair the near-term chart damage that was inflicted last week. Gold bulls do still have the overall near-term and longer-term technical advantage.
Bulls' next near-term upside technical objective is to produce a close December gold above solid technical resistance at $1,366.00.
Bears' next near-term downside price objective is closing prices below major psychological support at $1,300.00.
First resistance is seen at Monday's high of $1,349.50 and then at $1,360.00.
Support is seen at Monday's low of $1,329.30 and then at $1,325.00.
Wyckoff's Market Rating: 7.0.
Daily Gold and Silver Expected Range:
Gold: US$1318- $1358
Silver: US$23.05 - $24.10
Gold Technical Precious Metals (2010-10-26)
Gold didn't show any big move since the opening of this week, whilst the descending channel over the four hour interval is still dominating the movements as seen on the secondary image. The upper line of this aforesaid channel and SMA 50 act as solid resistance that could force it to breach the key support levels of 1332.00- Fibonacci level of 23.6% for the CD leg of our captured bearish harmonic AB=CD pattern- . A break of which will be an indication that the scientific objective of the pattern at 38.2% of CD leg will be reached. Henceforth, we still see chances for achieving additional downside movements over intraday basis.
The trading range for today is among the key support at 1307.00 and key resistance now at 1365.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain intact.
Weekly Report Previous Report
Support 1332.00 1325.00 1320.00 1314.00 1307.00
Resistance 1345.00 1348.00 1352.00 1355.00 1365.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1342.00 targeting 1307.00 and stop loss above 1365.00 might be appropriate.
The trading range for today is among the key support at 1307.00 and key resistance now at 1365.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain intact.
Weekly Report Previous Report
Support 1332.00 1325.00 1320.00 1314.00 1307.00
Resistance 1345.00 1348.00 1352.00 1355.00 1365.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1342.00 targeting 1307.00 and stop loss above 1365.00 might be appropriate.
Recommendation GOLD
Technical GOLD
Gold is still moving inside the descending channel that organizes the bearish movements that started due to the captured bearish harmonic AB=CD pattern. The scientific technical objective of the pattern hasn't been reached yet and thus, we believe that the upper line of the channel could force it to reach 38.2% Fibonacci level of the CD leg at 1299.00. Thereby, we hold onto our bearish predictions for the rest of the day. A break of 1332.00 will accelerate this downside move.
The trading range for today is among the key support at 1307.00 and key resistance now at 1365.00.
The general trend over the short term basis is to the upside targeting $1400.00 per ounce as far as areas of 1120.00 remain intact.
Support 1339.00 1332.00 1325.00 1320.00 1314.00
Resistance 1348.00 1352.00 1355.00 1365.00 1372.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1352.00 targeting 1299.00 and stop loss above 1385.00 might be appropriate
Gold is still moving inside the descending channel that organizes the bearish movements that started due to the captured bearish harmonic AB=CD pattern. The scientific technical objective of the pattern hasn't been reached yet and thus, we believe that the upper line of the channel could force it to reach 38.2% Fibonacci level of the CD leg at 1299.00. Thereby, we hold onto our bearish predictions for the rest of the day. A break of 1332.00 will accelerate this downside move.
The trading range for today is among the key support at 1307.00 and key resistance now at 1365.00.
The general trend over the short term basis is to the upside targeting $1400.00 per ounce as far as areas of 1120.00 remain intact.
Support 1339.00 1332.00 1325.00 1320.00 1314.00
Resistance 1348.00 1352.00 1355.00 1365.00 1372.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1352.00 targeting 1299.00 and stop loss above 1385.00 might be appropriate
Dollar Loses Slightly Against Major Currencies
Dollar Loses Slightly Against Major Currencies
The U.S. dollar was rather stable against its major counterparts in today’s trading, where the U.S. dollar plummeted slightly after the G20 announced they will avoid currency devaluation, while speculations mounted in markets that the Fed will undertake quantitative easing in their upcoming meeting next week.
Moreover, data from the housing market proved to be better than median estimates, where the existing home sales rose in September by 10.0%, while the rally in stock markets continued amid rising optimism among investors over the outlook for companies’ earnings.
The U.S. dollar index, which measures the performance of the U.S. dollar against a basket of currencies including the Euro, the Pound, and the Yen, rose slightly to trade at 77.07, compared with the opening level at 76.99, while recording the highest today at 77.36 and the lowest at 76.71. Gold prices slightly rose to trade at $1335.22 an ounce, compared with the opening level at $1333.83 an ounce, while oil prices slightly declined to trade at $81.86 a barrel, compared with the opening level at $82.07 a barrel.
The Euro slightly rose against the U.S. dollar, where the EUR/USD pair is trading now at $1.3969, compared with the opening level at $1.3960, while recording the highest at $1.4080, and the lowest at $1.3954. If the pair manages to rise above $1.4080 targets will be set at $1.4250, nevertheless, so long as the pair remains below this level, the target will be the support level at $1.3880.
The British Pound rose against the U.S. dollar today, where the GBP/USD pair is trading at $1.5737, compared with the opening level at $1.5683, while the pair recorded its highest today at $1.5772, and the lowest at $1.5677. the pair is facing a support at $1.5700, however, a confirmation is still needed, since the pair is expected to head towards the $1.5835 resistance level, while breaching this resistance would open the way for the pair to rise towards the $1.6235 level.
Finally, the U.S. dollar declined against the Japanese Yen, where the USD/JPY pair is trading at 80.69, compared with the opening level at 81.28, where the pair recorded its highest at 81.32 and the lowest at 80.41. the pair is expected to continue its downside wave so long as it continues to trade below the resistance level at 81.00, while the target is set at 79.60, and only closing above 82.15 would change the pair’s direction from downside to the upside
The U.S. dollar was rather stable against its major counterparts in today’s trading, where the U.S. dollar plummeted slightly after the G20 announced they will avoid currency devaluation, while speculations mounted in markets that the Fed will undertake quantitative easing in their upcoming meeting next week.
Moreover, data from the housing market proved to be better than median estimates, where the existing home sales rose in September by 10.0%, while the rally in stock markets continued amid rising optimism among investors over the outlook for companies’ earnings.
The U.S. dollar index, which measures the performance of the U.S. dollar against a basket of currencies including the Euro, the Pound, and the Yen, rose slightly to trade at 77.07, compared with the opening level at 76.99, while recording the highest today at 77.36 and the lowest at 76.71. Gold prices slightly rose to trade at $1335.22 an ounce, compared with the opening level at $1333.83 an ounce, while oil prices slightly declined to trade at $81.86 a barrel, compared with the opening level at $82.07 a barrel.
The Euro slightly rose against the U.S. dollar, where the EUR/USD pair is trading now at $1.3969, compared with the opening level at $1.3960, while recording the highest at $1.4080, and the lowest at $1.3954. If the pair manages to rise above $1.4080 targets will be set at $1.4250, nevertheless, so long as the pair remains below this level, the target will be the support level at $1.3880.
The British Pound rose against the U.S. dollar today, where the GBP/USD pair is trading at $1.5737, compared with the opening level at $1.5683, while the pair recorded its highest today at $1.5772, and the lowest at $1.5677. the pair is facing a support at $1.5700, however, a confirmation is still needed, since the pair is expected to head towards the $1.5835 resistance level, while breaching this resistance would open the way for the pair to rise towards the $1.6235 level.
Finally, the U.S. dollar declined against the Japanese Yen, where the USD/JPY pair is trading at 80.69, compared with the opening level at 81.28, where the pair recorded its highest at 81.32 and the lowest at 80.41. the pair is expected to continue its downside wave so long as it continues to trade below the resistance level at 81.00, while the target is set at 79.60, and only closing above 82.15 would change the pair’s direction from downside to the upside
Fed’s Bullard Says Financial Stability Council Faces Challenges
Fed’s Bullard Says Financial Stability Council Faces Challenges
The Financial Stability Oversight Council created by legislation this year to identify systemic risks faces “significant challenges,” such as taking the right policy actions while the economy is relatively good, said Federal Reserve Bank of St. Louis President James Bullard.
“Can the interagency council come to an agreement on a specific risk and an associated policy action when times are good?” the regional bank chief said in the text of a speech today in St. Louis. In addition, “it is also possible to overreact, shutting down a particular financial market practice which in reality does not pose a systemic risk.”
The council, which includes the Fed, was created by the financial overhaul legislation signed into law by President Barack Obama in July. Bullard, who votes on the Federal Open Market Committee this year, didn’t comment on monetary policy in his remarks.
“There is no question that, despite the passage of the legislation, regulatory reform is still far from complete,” he said. “Because the devil is in the details, economic decisions are being affected by the uncertainty surrounding the rule- writing process.”
Bullard, 49, joined the St. Louis Fed’s research department in 1990 and became president of the bank in 2008. He spoke during a conference at the bank today
The Financial Stability Oversight Council created by legislation this year to identify systemic risks faces “significant challenges,” such as taking the right policy actions while the economy is relatively good, said Federal Reserve Bank of St. Louis President James Bullard.
“Can the interagency council come to an agreement on a specific risk and an associated policy action when times are good?” the regional bank chief said in the text of a speech today in St. Louis. In addition, “it is also possible to overreact, shutting down a particular financial market practice which in reality does not pose a systemic risk.”
The council, which includes the Fed, was created by the financial overhaul legislation signed into law by President Barack Obama in July. Bullard, who votes on the Federal Open Market Committee this year, didn’t comment on monetary policy in his remarks.
“There is no question that, despite the passage of the legislation, regulatory reform is still far from complete,” he said. “Because the devil is in the details, economic decisions are being affected by the uncertainty surrounding the rule- writing process.”
Bullard, 49, joined the St. Louis Fed’s research department in 1990 and became president of the bank in 2008. He spoke during a conference at the bank today
Oct 25, 2010
Widening surplus in the Japanese merchandise trade balance along with falling exports
A report today showed that Japan's merchandise trade balance surplus widened during the month of September along with the nation's exports grew at the slowest peace this year, signaling that recovery in the nation is losing steam, while the economy is losing its main engine for economic growth as cooled the global demand.
Japan's merchandise trade balance rose to 687.0 billion yen during September, compared with a previous reading of 103.2 billion yen in August, which revised to 86 billion yen, while the analyst's expectations referred to 710 billion yen.
Japan's adjusted merchandise trade balance inclined to 587.6 billion yen in September, compared with a prior reading 589.7 billion yen during August that revised to 570.2 billion yen, and the actual reading came higher than analyst's expectations that predicted of 495.5 billion yen.
Furthermore, the Japan's merchandise trade exports (YoY) came at 14.4 during the month of September, compared with a previous 15.3, while the expectations estimates of 23.5. Also the Japan's merchandise trade imports (YoY) came at 9.9 in September, compared with a prior reading 17.9, whereas the anticipations referred to 7.4.
According to today's report showed that the Japan's exports sector remain weak, and Japanese export-fueled rebound is losing momentum, increasing the pressure on Bank of Japan to find new ways to support the economy, and on the government to execute its stimulus plans which working to support the economy recovery.
The Prime Minister Mr. Naoto Kan approved during this month to pump a 5.1 trillion yen (62 billion U.S. dollars) stimulus plan to keep the economy on the track to recovery, and help local government and small business cope with the yen's appreciation.
On the other hand, Fundamentals confirm the weakness of the economic recovery in Japan; Tertiary index recorded the first drop in three months, showing that Japan suffers from weakness in domestic spending along with the decline in exports, weakening the Japanese economy as a whole.
The stronger currency is helping the nation's exports to decline, where Honda Motor Co. (which is the world's largest manufactures of motorcycles and the second biggest automaker in Japan) is under threat as a higher yen along with the Japanese companies' overseas exports.
Analysts said "Japan will be teetering on the brink of recession over the coming year and downgrading their forecast for Japanese growth to 0.5 percent from 1.1 percent for the year starting April 2011,"
Japan's government cut its evaluation of the economy for the fist time in 20 months last week, highlighting weakening the exports to Asian nations. China's demand may retreat after the PBOC increased the interest rate to 5.56% for the first time since the crisis began in 2007.
While, the Bank agreed to buy corporate and government bonds at maturity from one year to two years in a new 5 trillion yen fund. The Bank kept monthly purchases of government bonds at 1.8 trillion yen, along with the credit program by 30 trillion yen
Japan's merchandise trade balance rose to 687.0 billion yen during September, compared with a previous reading of 103.2 billion yen in August, which revised to 86 billion yen, while the analyst's expectations referred to 710 billion yen.
Japan's adjusted merchandise trade balance inclined to 587.6 billion yen in September, compared with a prior reading 589.7 billion yen during August that revised to 570.2 billion yen, and the actual reading came higher than analyst's expectations that predicted of 495.5 billion yen.
Furthermore, the Japan's merchandise trade exports (YoY) came at 14.4 during the month of September, compared with a previous 15.3, while the expectations estimates of 23.5. Also the Japan's merchandise trade imports (YoY) came at 9.9 in September, compared with a prior reading 17.9, whereas the anticipations referred to 7.4.
According to today's report showed that the Japan's exports sector remain weak, and Japanese export-fueled rebound is losing momentum, increasing the pressure on Bank of Japan to find new ways to support the economy, and on the government to execute its stimulus plans which working to support the economy recovery.
The Prime Minister Mr. Naoto Kan approved during this month to pump a 5.1 trillion yen (62 billion U.S. dollars) stimulus plan to keep the economy on the track to recovery, and help local government and small business cope with the yen's appreciation.
On the other hand, Fundamentals confirm the weakness of the economic recovery in Japan; Tertiary index recorded the first drop in three months, showing that Japan suffers from weakness in domestic spending along with the decline in exports, weakening the Japanese economy as a whole.
The stronger currency is helping the nation's exports to decline, where Honda Motor Co. (which is the world's largest manufactures of motorcycles and the second biggest automaker in Japan) is under threat as a higher yen along with the Japanese companies' overseas exports.
Analysts said "Japan will be teetering on the brink of recession over the coming year and downgrading their forecast for Japanese growth to 0.5 percent from 1.1 percent for the year starting April 2011,"
Japan's government cut its evaluation of the economy for the fist time in 20 months last week, highlighting weakening the exports to Asian nations. China's demand may retreat after the PBOC increased the interest rate to 5.56% for the first time since the crisis began in 2007.
While, the Bank agreed to buy corporate and government bonds at maturity from one year to two years in a new 5 trillion yen fund. The Bank kept monthly purchases of government bonds at 1.8 trillion yen, along with the credit program by 30 trillion yen
Technical Precious Metals
Harmonically, the metal didn't reach the scientific technical target of the bearish harmonic AB=CD pattern at 1299.00-Fibonacci level of CD leg-. It is still struggling around 23.6% as seen on the provided daily chart. Having a deeper look at the four hour chart, we can see a descending channel that dominates the movements over short term basis. We expect that gold could touch the upper line of this channel, where Stochastic will be moving within overbought areas before resuming the downside rally during this week.
The trading range for this week is among the key support at 1291.00 and key resistance now at 1389.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain intact.
Previous Report
Support 1325.00 1314.00 1307.00 1299.00 1294.00
Resistance 1348.00 1355.00 1365.00 1372.00 1380.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1352.00 targeting 1299.00 and stop loss above 1385.00 might be appropriate.
The trading range for this week is among the key support at 1291.00 and key resistance now at 1389.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain intact.
Previous Report
Support 1325.00 1314.00 1307.00 1299.00 1294.00
Resistance 1348.00 1355.00 1365.00 1372.00 1380.00
Recommendation Based on the charts and explanations above our opinion is, selling gold around 1352.00 targeting 1299.00 and stop loss above 1385.00 might be appropriate.
News and gold strategy from chansour
Gold Upward Momentum Continues for Fourth Straight Session
Gold Ended Flat As Dollar Pared its Gains Ahead of G20 Finance Ministers Meeting
25 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1332 1337 1346
1st support 2nd support 3rd support
Today’s support US$ 1319 1310 1305
Today’s pivot point US$ 1323
The Day’s Story:
Spot Gold ended marginally higher on Friday in a rather quiet session after sharp declines a day earlier and ended lower for the first time in 12 weeks. Gold fell further as dollar strengthened earlier during the session but recovered as dollar gave away those gains. Gold has been tracking dollar movement for last 12 weeks now and moving opposite direction to greenback although much of that move is for upside due to dollar weakness. Gold has suffered some chart damage this week as it came off its record high and fell to its lowest level in 2 weeks at the back of some profit taking and short covering rally in U.S dollar. Despite gold’s 3.3% weekly loss analysts expect a shallow correction and believe precious metal outlook is still bullish in medium to long term as market awaits FED’s meeting in November when they are expecting an announcement for fresh round of monetary easing.
Major U.S. stock indices were mixed at the end of Friday session with Dow edging lower while S&P500 and NASDAQ both added further to their gains. Traders focused on the latest earnings reports on Friday and despite most of the companies have topped analysts’ forecast traders remain concerned about currencies and the weak economic backdrop. The Dow's decline on Friday was led by AMEX and Verizon Communications. Both reported better-than-expected earnings, but AMEX fell on concerns that it is seeing weak demand for new loans, and Verizon dropped on disappointment over slowing wireless subscriber growth. Market however, was reluctant to pick a direction as traders were waiting the outcome of G20 meeting in South Korea regarding currencies valuation what’s been labeled as “Currency War”.
U.S dollar ended flat on Friday after spending most of the day in green territory but headed lower in the final hours and that’s what helped gold erased its earlier losses. The dollar was on track to snap a five-week losing streak against major currencies as traders took profits ahead of possible news from the G20 meeting and the euro repeatedly ran into technical resistance above $1.40. The correlation between the metal and the dollar has tightened to a negative 0.77, near its closest link this year, Reuters data showed. In other outside markets, Crude Oil rose significantly while other precious metal had a mixed day with Silver retreating while Platinum
and Palladium enjoyed modest gains.
Over the weekend Group of 20 finance chiefs in South Korea sought to calm trade frictions that threaten the world economy by pledging to avoid weakening their currencies to boost exports and to let markets increasingly set foreign-exchange values.
“The terms of the currency policy are so vague and broad that they can be interpreted into different meanings by each country as well as market players,” said Oh Suk Tae, an economist at SC First Bank Korea Ltd. in Seoul. “I’m not sure whether the currency war is over. We need to see actions in line with the verbal vows.”
With such an outcome gold direction for this week will be determined depending if traders think that Finance Ministers and Central bankers of World 20 largest nations have done enough to stabilize currency market fluctuation. Commenting on FED’s plan for a fresh round of QE, German finance minister Rainer Bruederle said “It’s the wrong way to try to prevent or solve problems by adding more liquidity,” “Excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate.”
Gold started its Friday session in a quiet mode but stayed in positive territory after a day of losses during Asian session. Gold came under selling pressure as markets in Europe started their trading day and fell to its intraday low of $1314.9 an ounce during early hours of European trade. Gold however made a comeback and pare all its losses during later part of European and early U.S session as dollar gave away its gains. Gold managed to close just above its previous close of $1225.5 an ounce at $1227.8 an ounce for the day.
Other Metals:
Silver futures for December delivery closed down 2.0 cent to $23.12 an ounce on Friday.
Platinum futures for January delivery rose by $1.70 to $1,675.10 an ounce on NYMEX.
Palladium futures for December delivery rose by $4.80 to $591.10 an ounce.
December N.Y. Copper closed up 2 cents $3.80 a pound on Friday.
Gold (News and Views):
December Comex gold closed down $0.50 at $1,325.10 an ounce on Friday.
The London P.M. gold fixing was $1,322.50 on Friday compared to its previous P.M fixing $1,343.50.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings rose 17 tons to 1304.342 tons on October 15.
The dollar index, which measures the U.S. currency against a basket of six major currencies, fell 0.06 to 77.39 on Friday.
Crude Oil for October delivery rose by $1.13 to settle at $81.91 on Friday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
Good physical demand from traditional bullion-buying centers such as India is strengthening as prices descend. Dealers in India reported they were continuing to stock up for forthcoming festivals, including
the Hindu festival of Diwali, a major gold-buying events, as prices corrected this week.
Factors Affecting Gold Price Yesterday:
Although gold prices are down on the week and could close lower on the week for the first time in six weeks, Commerzbank notes the drop in price has not come with heavy selling out of the gold exchange traded funds. They speculate it is short-term buyers who have left market instead. “It is remarkable that the price slump this week was accompanied by only low ETF outflows. This implies that speculative financial investors have taken profits. The CFTC statistics on market positioning, published after close of trading this evening, will shed some light on this. That said, the statistics only include the data up to the end of Tuesday,” the bank says.
Investors seemed sidelined and trading was “quiet,” allowing some of Thursday’s weakness to follow through, said HSBC analyst Jim Steel.
For next week, “it’s possible that we give up a little bit more, but nothing significant,” he added.
Standard Chartered analyst Daniel Smith said the dollar has been a very important driver and gold could see more weakness in the short term.
"I think the price has run up too fast and we're just going through a period of consolidation now," Smith said.
"With risk appetite and investor confidence showing signs of returning, there is the risk of further profit taking in both gold and silver; however with background dollar weakness lurking, investor concerns about the long-term inflationary implications of QE (quantitative easing) and physical demand at its seasonally strongest, we expect dips to remain well supported and viewed as a buying opportunity," FastMarkets.com research analyst James Moore said in a daily report.
In a daily report, BGC Financial technical strategist Roger Volz said gold has moved into the beginning of a 21 to 55 day corrective phase below $1,346 with its next downside continuation line at $1,310.
Gold Future Outlook:
Rich DeFalco, president of West Cooper Asset Management, said it’s likely gold will see a more choppy trade going into next week and the next few weeks because of the upcoming Fed meeting and the U.S. mid-term elections. Stronger equities – which have given gold support up until this week – could continue next week as the second batch of corporate earnings is released. Earnings have been relatively healthy so far.
“Right now I see gold fluctuating. People say if it breaks $1,300 it could go to $1,250 and if gets back above $1,350 it could go to $1,450. To me, though it’s still in a trading range. In the short-term, I think the downside is limited,” DeFalco said.
GoldCore notes with gold prices down 3% in dollar terms on the week, the metal could have its first weekly lower close in six weeks. It’s still up for debate whether the break will spur a deeper correction and consolidation or whether it is a short correction and gold will rebound. “Recent years have seen many
corrections which have all been swift but shallow and this may be the case again,” Goldcore said. The firm puts support is at $1,300/oz and at the previous resistance and 100 day moving average between $1,248 and $1,260. A 10% correction from the recent nominal high would put gold at $1,242. “Ordinarily, gold would correct back to these levels but this is no ordinary market and with QE2 set to be embarked on and physical demand from Asia and internationally and from many large creditor nation central banks, gold could surprise to the upside as it has done in recent weeks,” they said.
Ed Meir, analyst at MF Global said, for the short-term it seems commodities in general are pulling back significantly whenever the dollar rises, even modestly. Still, he said, the strategy to sell the dollar and buy dips in commodities will remain; at least until the Federal Reserve meeting in early November is completed.
Analysts at BNP Paribas have a little more favorable outlook toward the buck. They said with the Fed taking a less aggressive approach to quantitative easing, it allows more negotiations at the G-20 meeting and an agreement on currencies. They suggest if there is a favorable outcome from the Seoul show, the dollar could bounce versus the euro and British pound. They add currencies that have rallied because of “expectations of increased liquidity are now likely to become increasingly vulnerable to at least a corrective pullback.”
Technical Analysis:
Last week price action has caused some damage for gold on charts. Gold price is now sitting below Bollinger middle band after flirting with upper band for last many weeks. We have to see if middle band provides enough resistance to push the price below towards lower band.
RSI has finally broken below oversold levels last week and sitting at 54 level, suggesting further losses may be on the cards before a rebound.
Slow Stochastics which gave us many false signals in last few weeks have finally headed lower and is now close to overbought conditions.
MACD study which had supported the price rise so far has finally given away and has crossed to the downside suggesting a trend reversal for intermediate term.
Although above indicators are painting a similar picture pointing further correction, keep an eye on dollar-gold inverse correlation which has been close to its strongest level in a year and any news causing further weakness in dollar will benefit gold to head towards its all time high.
Next Resistance lies at $1340-42 and then at $1350 level.
Short term Support is sitting at $316-18 level and then 1308-10.
Daily Gold and Silver Expected Range:
Gold: US$1310- $1348
Silver: US$22.82 - $23.80
Gold Ended Flat As Dollar Pared its Gains Ahead of G20 Finance Ministers Meeting
25 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1332 1337 1346
1st support 2nd support 3rd support
Today’s support US$ 1319 1310 1305
Today’s pivot point US$ 1323
The Day’s Story:
Spot Gold ended marginally higher on Friday in a rather quiet session after sharp declines a day earlier and ended lower for the first time in 12 weeks. Gold fell further as dollar strengthened earlier during the session but recovered as dollar gave away those gains. Gold has been tracking dollar movement for last 12 weeks now and moving opposite direction to greenback although much of that move is for upside due to dollar weakness. Gold has suffered some chart damage this week as it came off its record high and fell to its lowest level in 2 weeks at the back of some profit taking and short covering rally in U.S dollar. Despite gold’s 3.3% weekly loss analysts expect a shallow correction and believe precious metal outlook is still bullish in medium to long term as market awaits FED’s meeting in November when they are expecting an announcement for fresh round of monetary easing.
Major U.S. stock indices were mixed at the end of Friday session with Dow edging lower while S&P500 and NASDAQ both added further to their gains. Traders focused on the latest earnings reports on Friday and despite most of the companies have topped analysts’ forecast traders remain concerned about currencies and the weak economic backdrop. The Dow's decline on Friday was led by AMEX and Verizon Communications. Both reported better-than-expected earnings, but AMEX fell on concerns that it is seeing weak demand for new loans, and Verizon dropped on disappointment over slowing wireless subscriber growth. Market however, was reluctant to pick a direction as traders were waiting the outcome of G20 meeting in South Korea regarding currencies valuation what’s been labeled as “Currency War”.
U.S dollar ended flat on Friday after spending most of the day in green territory but headed lower in the final hours and that’s what helped gold erased its earlier losses. The dollar was on track to snap a five-week losing streak against major currencies as traders took profits ahead of possible news from the G20 meeting and the euro repeatedly ran into technical resistance above $1.40. The correlation between the metal and the dollar has tightened to a negative 0.77, near its closest link this year, Reuters data showed. In other outside markets, Crude Oil rose significantly while other precious metal had a mixed day with Silver retreating while Platinum
and Palladium enjoyed modest gains.
Over the weekend Group of 20 finance chiefs in South Korea sought to calm trade frictions that threaten the world economy by pledging to avoid weakening their currencies to boost exports and to let markets increasingly set foreign-exchange values.
“The terms of the currency policy are so vague and broad that they can be interpreted into different meanings by each country as well as market players,” said Oh Suk Tae, an economist at SC First Bank Korea Ltd. in Seoul. “I’m not sure whether the currency war is over. We need to see actions in line with the verbal vows.”
With such an outcome gold direction for this week will be determined depending if traders think that Finance Ministers and Central bankers of World 20 largest nations have done enough to stabilize currency market fluctuation. Commenting on FED’s plan for a fresh round of QE, German finance minister Rainer Bruederle said “It’s the wrong way to try to prevent or solve problems by adding more liquidity,” “Excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate.”
Gold started its Friday session in a quiet mode but stayed in positive territory after a day of losses during Asian session. Gold came under selling pressure as markets in Europe started their trading day and fell to its intraday low of $1314.9 an ounce during early hours of European trade. Gold however made a comeback and pare all its losses during later part of European and early U.S session as dollar gave away its gains. Gold managed to close just above its previous close of $1225.5 an ounce at $1227.8 an ounce for the day.
Other Metals:
Silver futures for December delivery closed down 2.0 cent to $23.12 an ounce on Friday.
Platinum futures for January delivery rose by $1.70 to $1,675.10 an ounce on NYMEX.
Palladium futures for December delivery rose by $4.80 to $591.10 an ounce.
December N.Y. Copper closed up 2 cents $3.80 a pound on Friday.
Gold (News and Views):
December Comex gold closed down $0.50 at $1,325.10 an ounce on Friday.
The London P.M. gold fixing was $1,322.50 on Friday compared to its previous P.M fixing $1,343.50.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings rose 17 tons to 1304.342 tons on October 15.
The dollar index, which measures the U.S. currency against a basket of six major currencies, fell 0.06 to 77.39 on Friday.
Crude Oil for October delivery rose by $1.13 to settle at $81.91 on Friday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
Good physical demand from traditional bullion-buying centers such as India is strengthening as prices descend. Dealers in India reported they were continuing to stock up for forthcoming festivals, including
the Hindu festival of Diwali, a major gold-buying events, as prices corrected this week.
Factors Affecting Gold Price Yesterday:
Although gold prices are down on the week and could close lower on the week for the first time in six weeks, Commerzbank notes the drop in price has not come with heavy selling out of the gold exchange traded funds. They speculate it is short-term buyers who have left market instead. “It is remarkable that the price slump this week was accompanied by only low ETF outflows. This implies that speculative financial investors have taken profits. The CFTC statistics on market positioning, published after close of trading this evening, will shed some light on this. That said, the statistics only include the data up to the end of Tuesday,” the bank says.
Investors seemed sidelined and trading was “quiet,” allowing some of Thursday’s weakness to follow through, said HSBC analyst Jim Steel.
For next week, “it’s possible that we give up a little bit more, but nothing significant,” he added.
Standard Chartered analyst Daniel Smith said the dollar has been a very important driver and gold could see more weakness in the short term.
"I think the price has run up too fast and we're just going through a period of consolidation now," Smith said.
"With risk appetite and investor confidence showing signs of returning, there is the risk of further profit taking in both gold and silver; however with background dollar weakness lurking, investor concerns about the long-term inflationary implications of QE (quantitative easing) and physical demand at its seasonally strongest, we expect dips to remain well supported and viewed as a buying opportunity," FastMarkets.com research analyst James Moore said in a daily report.
In a daily report, BGC Financial technical strategist Roger Volz said gold has moved into the beginning of a 21 to 55 day corrective phase below $1,346 with its next downside continuation line at $1,310.
Gold Future Outlook:
Rich DeFalco, president of West Cooper Asset Management, said it’s likely gold will see a more choppy trade going into next week and the next few weeks because of the upcoming Fed meeting and the U.S. mid-term elections. Stronger equities – which have given gold support up until this week – could continue next week as the second batch of corporate earnings is released. Earnings have been relatively healthy so far.
“Right now I see gold fluctuating. People say if it breaks $1,300 it could go to $1,250 and if gets back above $1,350 it could go to $1,450. To me, though it’s still in a trading range. In the short-term, I think the downside is limited,” DeFalco said.
GoldCore notes with gold prices down 3% in dollar terms on the week, the metal could have its first weekly lower close in six weeks. It’s still up for debate whether the break will spur a deeper correction and consolidation or whether it is a short correction and gold will rebound. “Recent years have seen many
corrections which have all been swift but shallow and this may be the case again,” Goldcore said. The firm puts support is at $1,300/oz and at the previous resistance and 100 day moving average between $1,248 and $1,260. A 10% correction from the recent nominal high would put gold at $1,242. “Ordinarily, gold would correct back to these levels but this is no ordinary market and with QE2 set to be embarked on and physical demand from Asia and internationally and from many large creditor nation central banks, gold could surprise to the upside as it has done in recent weeks,” they said.
Ed Meir, analyst at MF Global said, for the short-term it seems commodities in general are pulling back significantly whenever the dollar rises, even modestly. Still, he said, the strategy to sell the dollar and buy dips in commodities will remain; at least until the Federal Reserve meeting in early November is completed.
Analysts at BNP Paribas have a little more favorable outlook toward the buck. They said with the Fed taking a less aggressive approach to quantitative easing, it allows more negotiations at the G-20 meeting and an agreement on currencies. They suggest if there is a favorable outcome from the Seoul show, the dollar could bounce versus the euro and British pound. They add currencies that have rallied because of “expectations of increased liquidity are now likely to become increasingly vulnerable to at least a corrective pullback.”
Technical Analysis:
Last week price action has caused some damage for gold on charts. Gold price is now sitting below Bollinger middle band after flirting with upper band for last many weeks. We have to see if middle band provides enough resistance to push the price below towards lower band.
RSI has finally broken below oversold levels last week and sitting at 54 level, suggesting further losses may be on the cards before a rebound.
Slow Stochastics which gave us many false signals in last few weeks have finally headed lower and is now close to overbought conditions.
MACD study which had supported the price rise so far has finally given away and has crossed to the downside suggesting a trend reversal for intermediate term.
Although above indicators are painting a similar picture pointing further correction, keep an eye on dollar-gold inverse correlation which has been close to its strongest level in a year and any news causing further weakness in dollar will benefit gold to head towards its all time high.
Next Resistance lies at $1340-42 and then at $1350 level.
Short term Support is sitting at $316-18 level and then 1308-10.
Daily Gold and Silver Expected Range:
Gold: US$1310- $1348
Silver: US$22.82 - $23.80
The U.S. Dollar held stead in Asian trading today, even as the meeting of the Group of 20 finance ministers sits for their first policy session in South Korea. Many investors speculate that there will be little progress regarding the question of aggressive currency devaluation.
The U.S. Dollar held stead in Asian trading today, even as the meeting of the Group of 20 finance ministers sits for their first policy session in South Korea. Many investors speculate that there will be little progress regarding the question of aggressive currency devaluation.
As G20 Meets, U.S. Dollar Gains Some Support
The U.S. Dollar held stead in Asian trading today, even as the meeting of the Group of 20 finance ministers sits for their first policy session in South Korea. Many investors speculate that there will be little progress regarding the question of aggressive currency devaluation.
Even the U.S. Treasury Secretary commented that this process is an ongoing one. As reported at 1:35 p.m. (JST) in Tokyo, the U.S. Dollar Index, a measure of the greenback’s strength against major currencies, rebounded slightly off of a 10-month trough but needs to break resistance at 77.60 to 77.65 .DXY in order to gain enough momentum to achieve a higher bounce.
The real meat of the issues at the G20 will be whether or not the Federal Reserve Bank will initiate additional quantitative easing measures, when they will do and by how much. Most major currencies are in a holding pattern as they wait for something definitive from the Fed. The common currency Euro rose against the U.S. Dollar, trading up .1% to $1.3934.
Against the Japanese Yen, the Euro fell .1% to 113.11 Yen with the majority of sell positions from institutional investors or hedge fund operators. Continued wariness over Japanese intervention is keeping the U.S. Dollar supported
As G20 Meets, U.S. Dollar Gains Some Support
The U.S. Dollar held stead in Asian trading today, even as the meeting of the Group of 20 finance ministers sits for their first policy session in South Korea. Many investors speculate that there will be little progress regarding the question of aggressive currency devaluation.
Even the U.S. Treasury Secretary commented that this process is an ongoing one. As reported at 1:35 p.m. (JST) in Tokyo, the U.S. Dollar Index, a measure of the greenback’s strength against major currencies, rebounded slightly off of a 10-month trough but needs to break resistance at 77.60 to 77.65 .DXY in order to gain enough momentum to achieve a higher bounce.
The real meat of the issues at the G20 will be whether or not the Federal Reserve Bank will initiate additional quantitative easing measures, when they will do and by how much. Most major currencies are in a holding pattern as they wait for something definitive from the Fed. The common currency Euro rose against the U.S. Dollar, trading up .1% to $1.3934.
Against the Japanese Yen, the Euro fell .1% to 113.11 Yen with the majority of sell positions from institutional investors or hedge fund operators. Continued wariness over Japanese intervention is keeping the U.S. Dollar supported
Oct 24, 2010
China captivates the attention in the Pacific
China captivates the attention in the Pacific
This week has witnessed a new surprising decision from the People’s Bank of China, which surprised us by raising interest rates for the first time since the beginning of the crisis in 2007; this comes under a series of decisions from China, aiming to reduce the size of liquidity in the financial markets, as well as reducing lending operations to rein in inflation rates that have reached its highest in 23 months.
The PBoC decided this week to raise interest rates unexpectedly for the first time since 2007 to 5.56% from the previous reading which was 5.31%, while interest rates on deposits increased by 25 basis points up to 2.50% from 2.25%.
This action came along with a series of measures aiming to reduce borrowing as well as working on reducing liquidity in the financial market. Final latest was the decision to raise the reserved cash ratio for the six largest Chinese banks to reduce lending operation by those banks.
The decision to raise interest rates may somehow have a negative impact on China's central bank objectives, such a decision is a factor of attraction of liquidity from global financial markets that will pass into the Chinese market, especially because of the recent global equity performance that has witnessed fluctuations, encouraging more investors to transfer money to the country that is witnessing the fastest economic growth rates in the world.
Such an increase in liquidity will push inflation rates to rise again, which nullifies the Chinese central bank's objective behind raising interest rates, beside this cash liquidity will increase from increased real estate prices in China increasing the bubble currently present in real estate prices, which raises fears of its explosion causing a major crisis in the world's second largest economy.
The Chinese economy reported third quarter growth figures, where the annual GDP recorded 9.6% expansion higher than expected growth rate of 9.5% yet slowing from the second quarter’s 10.3%. Growth during the third quarter this year was the slowest this year after 11.9% during the first quarter and 10.3% in the second quarter. This confirms the negative impacts caused by high inflation rates, where during the month of September it stretched to 3.6% which is compatible with expectations being the highest level of inflation rate since 23 months.
This kind of decision confirms the Chinese government's confidence in its recovery, and also confirms fears of rising inflation and rising real estate prices in the region. This will open the doors for debate on the revaluation of the Chinese yuan during the G20 summit, which will be held in South Korea this weekend
This week has witnessed a new surprising decision from the People’s Bank of China, which surprised us by raising interest rates for the first time since the beginning of the crisis in 2007; this comes under a series of decisions from China, aiming to reduce the size of liquidity in the financial markets, as well as reducing lending operations to rein in inflation rates that have reached its highest in 23 months.
The PBoC decided this week to raise interest rates unexpectedly for the first time since 2007 to 5.56% from the previous reading which was 5.31%, while interest rates on deposits increased by 25 basis points up to 2.50% from 2.25%.
This action came along with a series of measures aiming to reduce borrowing as well as working on reducing liquidity in the financial market. Final latest was the decision to raise the reserved cash ratio for the six largest Chinese banks to reduce lending operation by those banks.
The decision to raise interest rates may somehow have a negative impact on China's central bank objectives, such a decision is a factor of attraction of liquidity from global financial markets that will pass into the Chinese market, especially because of the recent global equity performance that has witnessed fluctuations, encouraging more investors to transfer money to the country that is witnessing the fastest economic growth rates in the world.
Such an increase in liquidity will push inflation rates to rise again, which nullifies the Chinese central bank's objective behind raising interest rates, beside this cash liquidity will increase from increased real estate prices in China increasing the bubble currently present in real estate prices, which raises fears of its explosion causing a major crisis in the world's second largest economy.
The Chinese economy reported third quarter growth figures, where the annual GDP recorded 9.6% expansion higher than expected growth rate of 9.5% yet slowing from the second quarter’s 10.3%. Growth during the third quarter this year was the slowest this year after 11.9% during the first quarter and 10.3% in the second quarter. This confirms the negative impacts caused by high inflation rates, where during the month of September it stretched to 3.6% which is compatible with expectations being the highest level of inflation rate since 23 months.
This kind of decision confirms the Chinese government's confidence in its recovery, and also confirms fears of rising inflation and rising real estate prices in the region. This will open the doors for debate on the revaluation of the Chinese yuan during the G20 summit, which will be held in South Korea this weekend
Some oppositions between leading economies taking place in G20
Some oppositions between leading economies taking place in G20
Yesterday the US Treasury Secretary; Timothy Geithner, asked actually G20 members to limit surpluses and deficits to a percentage of output, in other words the US is requiring that countries set targets to minimize trade imbalances which was straight up rejected by other superpowers such as Japan, Germany and Russia on the opening day today of the meeting of finance ministers in South Korea
Yesterday the US Treasury Secretary; Timothy Geithner, asked actually G20 members to limit surpluses and deficits to a percentage of output, in other words the US is requiring that countries set targets to minimize trade imbalances which was straight up rejected by other superpowers such as Japan, Germany and Russia on the opening day today of the meeting of finance ministers in South Korea
Oct 23, 2010
A peaceful end for the week in the U.S VS a very busy one in Canada
A peaceful end for the week in the U.S VS a very busy one in Canada
A peaceful end for the week in the U.S VS a very busy one in Canada
The world's largest economy will end this hectic week in a calm manor as the economic calendar is clear from any release the whole day, leaving investors anticipating through the weekend until Monday. As for Canada, today will be one of the week's busiest as it will reveal important gauges about its inflation and spending.
This week the U.S economy released a lot of important data including the Fed's Beige Book, where every data, figure and gauge proved even further that the U.S recovery has severely slowed down with fears of a complete halt.
Excruciating unemployment, awfully low income and spending levels make recovery impossible, while the Federal Reserve and the U.S government are trying their best to help the labor sector to get out of the rot it is currently in.
Moving up north, Canada will witness one busy day! As the neighboring and closely related economy to the U.S will reveal information and figures regarding its inflation and spending levels, this comes after the Bank of Canada decided to keep interest rates unchanged at 1.0% after three consecutive hikes each worth 25 basis points, and after releasing the Monetary policy statement which encouraged domestic spending and saying the recovery lays in the hands of domestic investments.
The Canadian Consumer Price Index report regarding September tomorrow is expected to show that monthly CPI climbed by 0.1% reversing the prior fall of 0.15, and on yearly basis to continue the prior climb of 1.7% with a bigger climb of 1.9%. As for Core CPI, it is expected to climb by 0.3% on monthly basis exceeding the prior climb of 0.1%, and on yearly basis Core CPI is expected to climb in constant rate from prior reading of 1.6%.
Canada's Retail Sales during August are expected to fall by 0.1% which is the same rate in fell in during July, yet Retail Sales excluding Autos are expected to reverse the prior fall of 0.4% with a 0.4% climb as consumers avoid purchasing any durable and expensive goods in such economic situation, Autos are durable expensive and an accessory, so it is normal to estimate lower sales
A peaceful end for the week in the U.S VS a very busy one in Canada
The world's largest economy will end this hectic week in a calm manor as the economic calendar is clear from any release the whole day, leaving investors anticipating through the weekend until Monday. As for Canada, today will be one of the week's busiest as it will reveal important gauges about its inflation and spending.
This week the U.S economy released a lot of important data including the Fed's Beige Book, where every data, figure and gauge proved even further that the U.S recovery has severely slowed down with fears of a complete halt.
Excruciating unemployment, awfully low income and spending levels make recovery impossible, while the Federal Reserve and the U.S government are trying their best to help the labor sector to get out of the rot it is currently in.
Moving up north, Canada will witness one busy day! As the neighboring and closely related economy to the U.S will reveal information and figures regarding its inflation and spending levels, this comes after the Bank of Canada decided to keep interest rates unchanged at 1.0% after three consecutive hikes each worth 25 basis points, and after releasing the Monetary policy statement which encouraged domestic spending and saying the recovery lays in the hands of domestic investments.
The Canadian Consumer Price Index report regarding September tomorrow is expected to show that monthly CPI climbed by 0.1% reversing the prior fall of 0.15, and on yearly basis to continue the prior climb of 1.7% with a bigger climb of 1.9%. As for Core CPI, it is expected to climb by 0.3% on monthly basis exceeding the prior climb of 0.1%, and on yearly basis Core CPI is expected to climb in constant rate from prior reading of 1.6%.
Canada's Retail Sales during August are expected to fall by 0.1% which is the same rate in fell in during July, yet Retail Sales excluding Autos are expected to reverse the prior fall of 0.4% with a 0.4% climb as consumers avoid purchasing any durable and expensive goods in such economic situation, Autos are durable expensive and an accessory, so it is normal to estimate lower sales
News and gold strategy
Gold Upward Momentum Continues for Fourth Straight Session
Gold Deep in Red Again for Second Day in Three Session As Dollar Made A Comeback
22 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1344 1362 1375
1st support 2nd support 3rd support
Today’s support US$ 1312 1299 1281
Today’s pivot point US$ 1331
The Day’s Story:
Gold fell sharply for second day in last three sessions inflicting some near term chart damage in the process according to Technical analysts. Gold came under severe selling pressure late in the session due to profit taking and a rebound in U.S dollar causing gold to fall below $1320 level for the first time in two weeks. Gold looks set to suffer its first weekly loss in 12 weeks although it is still up by 23% in 2010 and well on its way to record its 10th annual gain. Gold traders will be watching closely the outcome of a G-20 meeting taking place in South Korea on Friday and Saturday. Traders will be looking for any announcements regarding currencies as most major countries these days want to keep their currencies deflated in order to boost exports which is a bullish underlying factor for precious metal.
Major U.S. stock indices ended marginally higher in a choppy trading session. Investors welcome the positive initial jobless claim numbers which came out better than expected falling 23000 to 452000 for the week ended on October 16. String of positive earnings from some large corporations also kept buyers coming in although effects were minimal as many analysts believe that better than expected earnings have already been factored in the prices. Better job numbers added further selling pressure to gold prices as improved economic outlook reduces the demand for safe haven assets such as gold. Next week, gold observers will be paying close attention to a number of major gold price indicators, including existing home sales figures, consumer confidence figures and the home price index. Across Atlantic, major European stocks finished significantly higher at some better than expected earnings news.
U.S dollar which was down for most of the Asian and European sessions made a strong come back later in New York trade and finished in positive territory. With greenback recovering some of its lost ground, stocks indices trimmed their gains and gold landed in the negative territory as well due to the strong inverse correlation between dollar and bullion. Dollar index bulls may have an upper hand in short term but long term outlook for greenback is still bearish which remains an underlying bullish factor for gold prices. Where do we go from here onwards largely depends on FED’s next meeting in November in which analysts are expecting
the announcement for next round of Quantitative Easing. For now gold prices seem to have had their share of such an expected move and we may expect a range bound trading until that time when exact details of monetary easing will be released. In other outside markets crude oil rebounded after huge losses a day earlier while other precious metals shared the same fate with bullion.
Gold started its Thursday session with minor gains and reached its intraday high of $1349 an ounce in early hours of Asian trading session. Gold gave away those marginal gains in later part of Asian session and moved into negative territory. Gold found some support during early part of European trading session and crawled its way back up in positive zone but once again could not hold on to its gains and fell back into red area as markets in North America started their trading day. Gold tried to recover early in the U.S session but resurging dollar and profit takers dragged it sharply lower to its intraday low of $1317.9 an ounce. Gold managed to pare some of its losses and finished at $1325.5 an ounce for the day.
Other Metals:
Silver futures for December delivery closed down 72.5 cent to $23.13 an ounce on Thursday.
Platinum futures for January delivery fell $13.90 to $1,673.40 an ounce on NYMEX.
Palladium futures for December delivery fell $4.35 to $586.30 an ounce.
December N.Y. Copper closed flat at $379.35 a pound on Thursday.
Gold (News and Views):
December Comex gold closed down $18.6 at $1,325.60 an ounce on Thursday.
The London P.M. gold fixing was $1,343.50 on Thursday compared to its previous P.M fixing $1,339.00.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings rose 17 tons to 1304.342 tons on October 15.
The dollar index, which measures the U.S. currency against a basket of six major currencies, rose 0.4% to 77.45 on Thursday.
Crude Oil for October delivery rose $1.07 to settle at $80.56 on Thursday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
While gold is often seen as the main inflation hedge, calculations by Barclays Capital show that the yellow metal’s long-term correlation with inflation expectations is “actually rather inconsistent and has turned from +1.6% in the 1990s to -3.2% since 2008.” The bank says agriculture, industrial metals and energy have the strongest correlations with inflation expectations, not surprising since they are heavily used in production. “In an environment of ample liquidity, it is those sectors facing supply tightness – commodities such as copper, grains, oil – that will experience the biggest upward pressures,” it says.
Factors Affecting Gold Price Yesterday:
“The metals are getting smacked,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “The magnitude of the decline isn’t equal to the gains in the dollar, but the gold market was looking for an excuse to correct.”
“The long-term rally may be a bit overdone,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago.
Gold prices are weaker, falling on profit-taking by funds, says George Gero, precious metals strategist and vice president, global futures, RBC Capital Markets. “Good stock earnings are moving asset allocation to other areas and dollar (is) holding up better,” he says. He warns that Oct. 27 is Comex option expirations “and we may see more violent ups and downs next week.”
"The only thing I see right now is that jobs came in a little better than expected," said EverBank World Markets' Mike Meyer in explaining the lower gold prices Thursday. "So it's still a matter of the whole global growth picture where we don't have a need for flight to safety -- in this case, gold -- when the global growth picture is brightening."
"With better-than expected jobs, the flight to safety just isn't there."
“We have to wait for the Fed to make a decision, and no one wants to sit in gold for the next several weeks,” Frank Lesh a trader at FuturePath Trading in Chicago. “If we see dollar strength, traders will sell gold.”
"There have been a lot of investors going into gold already and probably at this juncture, would probably be a little hesitant, because now everyone is focusing on currency moves and the outcome of what could happen at the weekend," said Ole Hansen, a senior manager at Saxo Bank.
Gold Future Outlook:
Medium-term, the break of $1,328.40 for Comex December gold makes the one-week decline “impulsive and powerful” a bearish pattern development, says Andrew Chaveriat of BNP Paribas, breaking the September up-channel support. When combined with the “overshoot” to new highs on Oct. 14, this price action often occurs at an important top, he says. While the current break should end soon, this is only the end of a first downswing in a medium-term drop to $1,300 and perhaps $1,273, he adds. That would be the 38.2% and the 50% retracement points of the July-October rally. The $1,300 is key. If it holds, it’s possible the current break is just a correction and will be followed by a rally back to or surpassing the Oct. 14 high. If it doesn’t, expect a deeper and/or longer reversal to $1,274 to $1,246.
Some buying on the lately dip in gold limited losses there Thursday, analysts at MKS Finance say. However, prices seem to be stuck in a range between $1,300 and $1,350 an ounce. Range-bound trade might be the rule for the next several trading sessions, they note. “The yellow metal will likely trade sideways ahead of the
Group of 20 finance ministers' meeting tomorrow and the U.S. Federal Reserve meeting on Nov. 3,” they said.
Gold prices may have “overshot” relative to the likely outcome of any quantitative easing by Federal Reserve in early November, says Anne-Laure Tremblay, precious metals strategy at BNP Paribas. China’s surprise rate hike on Oct. 19 to compensate for international pressure for a stronger yuan might mean the Fed could “tone down its position to reassure U.S. bond investors,” Tremblay says. The outcome of the FOMC meeting will show how far the U.S. is willing to reach out to avoid a currency war. “In our view, the recent Chinese interest rate move likely increases the chances of a compromise being reached at the G20 summit. Failure to reach an agreement, and subsequent FX interventions by individual countries, would likely have a positive impact on the gold price. Indeed, it would dent (further) investors’ confidence in fiat currencies and would be an obstacle to economic growth,” she says. Despite believing that gold prices rose too high, BNP Paribas remains “positive” toward gold through 2011.
John Doody of goldstockanalyst.com said the recent gold price fluctuations have been "trivial." He said that recent moves are relatively insignificant in the context of $1,300 gold. What's more important he said, is to look at the long-term picture, which he believes shows that gold will definitely advance higher.
Technical Analysis (By Jim Wyckoff):
From an important technical perspective, gold prices closed near the session low Thursday and hit a fresh two-week low. Prices also scored a bearish "outside day" down on the daily bar chart Thursday, whereby the high was higher and low was lower than the previous session's trading range, with a lower close. Some near-term technical damage was inflicted in gold Thursday as a 2.5-month-old uptrend on the daily bar chart was at least temporarily negated, to begin to suggest that a near-term market top is in place.
However, gold bulls do still have the overall near-term and longer-term technical advantage, but have faded this week and need to show fresh power soon.
Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at $1,366.00.
Bears' next near-term downside price objective is closing prices below major psychological support at $1,300.00.
First resistance is seen at $1,330.00 and then at $1,340.00.
Support is seen at Thursday's low of $1,318.20 and then at $1,310.00. Wyckoff's Market Rating: 6.5.
Daily Gold and Silver Expected Range:
Gold: US$1308- $1342
Silver: US$22.75 - $23.52
Gold Deep in Red Again for Second Day in Three Session As Dollar Made A Comeback
22 Oct 2010 1st resistance 2nd resistance 3rd resistance
Today’s resistance US$ 1344 1362 1375
1st support 2nd support 3rd support
Today’s support US$ 1312 1299 1281
Today’s pivot point US$ 1331
The Day’s Story:
Gold fell sharply for second day in last three sessions inflicting some near term chart damage in the process according to Technical analysts. Gold came under severe selling pressure late in the session due to profit taking and a rebound in U.S dollar causing gold to fall below $1320 level for the first time in two weeks. Gold looks set to suffer its first weekly loss in 12 weeks although it is still up by 23% in 2010 and well on its way to record its 10th annual gain. Gold traders will be watching closely the outcome of a G-20 meeting taking place in South Korea on Friday and Saturday. Traders will be looking for any announcements regarding currencies as most major countries these days want to keep their currencies deflated in order to boost exports which is a bullish underlying factor for precious metal.
Major U.S. stock indices ended marginally higher in a choppy trading session. Investors welcome the positive initial jobless claim numbers which came out better than expected falling 23000 to 452000 for the week ended on October 16. String of positive earnings from some large corporations also kept buyers coming in although effects were minimal as many analysts believe that better than expected earnings have already been factored in the prices. Better job numbers added further selling pressure to gold prices as improved economic outlook reduces the demand for safe haven assets such as gold. Next week, gold observers will be paying close attention to a number of major gold price indicators, including existing home sales figures, consumer confidence figures and the home price index. Across Atlantic, major European stocks finished significantly higher at some better than expected earnings news.
U.S dollar which was down for most of the Asian and European sessions made a strong come back later in New York trade and finished in positive territory. With greenback recovering some of its lost ground, stocks indices trimmed their gains and gold landed in the negative territory as well due to the strong inverse correlation between dollar and bullion. Dollar index bulls may have an upper hand in short term but long term outlook for greenback is still bearish which remains an underlying bullish factor for gold prices. Where do we go from here onwards largely depends on FED’s next meeting in November in which analysts are expecting
the announcement for next round of Quantitative Easing. For now gold prices seem to have had their share of such an expected move and we may expect a range bound trading until that time when exact details of monetary easing will be released. In other outside markets crude oil rebounded after huge losses a day earlier while other precious metals shared the same fate with bullion.
Gold started its Thursday session with minor gains and reached its intraday high of $1349 an ounce in early hours of Asian trading session. Gold gave away those marginal gains in later part of Asian session and moved into negative territory. Gold found some support during early part of European trading session and crawled its way back up in positive zone but once again could not hold on to its gains and fell back into red area as markets in North America started their trading day. Gold tried to recover early in the U.S session but resurging dollar and profit takers dragged it sharply lower to its intraday low of $1317.9 an ounce. Gold managed to pare some of its losses and finished at $1325.5 an ounce for the day.
Other Metals:
Silver futures for December delivery closed down 72.5 cent to $23.13 an ounce on Thursday.
Platinum futures for January delivery fell $13.90 to $1,673.40 an ounce on NYMEX.
Palladium futures for December delivery fell $4.35 to $586.30 an ounce.
December N.Y. Copper closed flat at $379.35 a pound on Thursday.
Gold (News and Views):
December Comex gold closed down $18.6 at $1,325.60 an ounce on Thursday.
The London P.M. gold fixing was $1,343.50 on Thursday compared to its previous P.M fixing $1,339.00.
The world’s largest gold exchange-traded fund, New York’s SPDR Gold Trust, said its holdings rose 17 tons to 1304.342 tons on October 15.
The dollar index, which measures the U.S. currency against a basket of six major currencies, rose 0.4% to 77.45 on Thursday.
Crude Oil for October delivery rose $1.07 to settle at $80.56 on Thursday on New York Mercantile Exchange.
Gold hit its true peak on Jan. 21, 1980, when it rose to $825.50 an ounce. Adjusted for inflation in 1980 dollars, that translates to an all-time record of $2,184.08 an ounce, in 2010 dollars.
While gold is often seen as the main inflation hedge, calculations by Barclays Capital show that the yellow metal’s long-term correlation with inflation expectations is “actually rather inconsistent and has turned from +1.6% in the 1990s to -3.2% since 2008.” The bank says agriculture, industrial metals and energy have the strongest correlations with inflation expectations, not surprising since they are heavily used in production. “In an environment of ample liquidity, it is those sectors facing supply tightness – commodities such as copper, grains, oil – that will experience the biggest upward pressures,” it says.
Factors Affecting Gold Price Yesterday:
“The metals are getting smacked,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “The magnitude of the decline isn’t equal to the gains in the dollar, but the gold market was looking for an excuse to correct.”
“The long-term rally may be a bit overdone,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago.
Gold prices are weaker, falling on profit-taking by funds, says George Gero, precious metals strategist and vice president, global futures, RBC Capital Markets. “Good stock earnings are moving asset allocation to other areas and dollar (is) holding up better,” he says. He warns that Oct. 27 is Comex option expirations “and we may see more violent ups and downs next week.”
"The only thing I see right now is that jobs came in a little better than expected," said EverBank World Markets' Mike Meyer in explaining the lower gold prices Thursday. "So it's still a matter of the whole global growth picture where we don't have a need for flight to safety -- in this case, gold -- when the global growth picture is brightening."
"With better-than expected jobs, the flight to safety just isn't there."
“We have to wait for the Fed to make a decision, and no one wants to sit in gold for the next several weeks,” Frank Lesh a trader at FuturePath Trading in Chicago. “If we see dollar strength, traders will sell gold.”
"There have been a lot of investors going into gold already and probably at this juncture, would probably be a little hesitant, because now everyone is focusing on currency moves and the outcome of what could happen at the weekend," said Ole Hansen, a senior manager at Saxo Bank.
Gold Future Outlook:
Medium-term, the break of $1,328.40 for Comex December gold makes the one-week decline “impulsive and powerful” a bearish pattern development, says Andrew Chaveriat of BNP Paribas, breaking the September up-channel support. When combined with the “overshoot” to new highs on Oct. 14, this price action often occurs at an important top, he says. While the current break should end soon, this is only the end of a first downswing in a medium-term drop to $1,300 and perhaps $1,273, he adds. That would be the 38.2% and the 50% retracement points of the July-October rally. The $1,300 is key. If it holds, it’s possible the current break is just a correction and will be followed by a rally back to or surpassing the Oct. 14 high. If it doesn’t, expect a deeper and/or longer reversal to $1,274 to $1,246.
Some buying on the lately dip in gold limited losses there Thursday, analysts at MKS Finance say. However, prices seem to be stuck in a range between $1,300 and $1,350 an ounce. Range-bound trade might be the rule for the next several trading sessions, they note. “The yellow metal will likely trade sideways ahead of the
Group of 20 finance ministers' meeting tomorrow and the U.S. Federal Reserve meeting on Nov. 3,” they said.
Gold prices may have “overshot” relative to the likely outcome of any quantitative easing by Federal Reserve in early November, says Anne-Laure Tremblay, precious metals strategy at BNP Paribas. China’s surprise rate hike on Oct. 19 to compensate for international pressure for a stronger yuan might mean the Fed could “tone down its position to reassure U.S. bond investors,” Tremblay says. The outcome of the FOMC meeting will show how far the U.S. is willing to reach out to avoid a currency war. “In our view, the recent Chinese interest rate move likely increases the chances of a compromise being reached at the G20 summit. Failure to reach an agreement, and subsequent FX interventions by individual countries, would likely have a positive impact on the gold price. Indeed, it would dent (further) investors’ confidence in fiat currencies and would be an obstacle to economic growth,” she says. Despite believing that gold prices rose too high, BNP Paribas remains “positive” toward gold through 2011.
John Doody of goldstockanalyst.com said the recent gold price fluctuations have been "trivial." He said that recent moves are relatively insignificant in the context of $1,300 gold. What's more important he said, is to look at the long-term picture, which he believes shows that gold will definitely advance higher.
Technical Analysis (By Jim Wyckoff):
From an important technical perspective, gold prices closed near the session low Thursday and hit a fresh two-week low. Prices also scored a bearish "outside day" down on the daily bar chart Thursday, whereby the high was higher and low was lower than the previous session's trading range, with a lower close. Some near-term technical damage was inflicted in gold Thursday as a 2.5-month-old uptrend on the daily bar chart was at least temporarily negated, to begin to suggest that a near-term market top is in place.
However, gold bulls do still have the overall near-term and longer-term technical advantage, but have faded this week and need to show fresh power soon.
Bulls' next near-term upside technical objective is to produce a close above solid technical resistance at $1,366.00.
Bears' next near-term downside price objective is closing prices below major psychological support at $1,300.00.
First resistance is seen at $1,330.00 and then at $1,340.00.
Support is seen at Thursday's low of $1,318.20 and then at $1,310.00. Wyckoff's Market Rating: 6.5.
Daily Gold and Silver Expected Range:
Gold: US$1308- $1342
Silver: US$22.75 - $23.52
Gold Forecast
Gold slipped sharply downwards closing negatively below23.6% Fibonacci level of the CD leg for our efficient bearish harmonic AB=CD pattern, as seen on the main daily chart. Thus, the door is opened for reaching the first awaited technical target of the pattern at 38.2% Fibonacci level of the CD leg which resides at 1299.00. Classically, the potential head and shoulders pattern is still in favor on the four hour interval and consequently we hold onto our negative predictions over intraday basis, supported by the new negative sign appearing on AROON indicator of the daily basis.
The trading range for today is among the key support at 1275.00 and key resistance now at 1365.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain intact.
Support 1320.00 1314.00 1307.00 1299.00 1291.00
________________________________________
Resistance 1328.00 1332.00 1339.00 1348.00 1355.00
________________________________________
Recommendation Based on the charts and explanations above our opinion is,
selling gold around 1332.00 targeting 1299.00 and stop loss above 1355.00
might be appropriate.
The trading range for today is among the key support at 1275.00 and key resistance now at 1365.00.
The general trend over the short term basis is to the upside, targeting $ 1400.00 per ounce as far as areas of 1120.00 remain intact.
Support 1320.00 1314.00 1307.00 1299.00 1291.00
________________________________________
Resistance 1328.00 1332.00 1339.00 1348.00 1355.00
________________________________________
Recommendation Based on the charts and explanations above our opinion is,
selling gold around 1332.00 targeting 1299.00 and stop loss above 1355.00
might be appropriate.
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