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
Oct 23, 2010
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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