Gold Traders Wait For The Three Ring Central Banker Circus This Week

Gold Traders Wait For The Three Ring Central Banker Circus This Week
Gold Traders Wait For The Three Ring Central Banker Circus This Week
As traders face a big big big week with the FOMC meeting ending on Wednesday, and the ECB and BoE meetings on Thursday there should be a lot of market action, but then following almost immediately we will have the US nonfarm payroll data, although coming after the FOMC decision, it might be a dull trading day. Traders will need to seek some relief after the volatility we might see this week. Gold is trading at 1326.75 in the Asian session gaining $4.85 as the US dollar continues to weaken. The DX is trading at 81.67 down by 10 pips this morning, and it seems that the odds are that the Fed will continue their asset purchases and the bets are that Mr. Bernanke will give no indication of any tapering. Last week a report in Bloomberg said that the Fed will reduce their asset purchased to 68 billion from the current 85 billion, which sent the markets on a roller coaster ride.

Some positive economic data from the U.S. and the EU pressurize gold price but the data was mixed and all the data is suggesting that major economies are very vulnerable to recessions which will support gold. Resistance of Gold is at $1,350 and $1,400 and the first level of support is at $1,300 which may be tested. Below that support is at $1,200 and the recent multiyear low on June 28 at $1,180. Goldman Sachs is leaving its estimate of $1,413 for gold this year unchanged as they do not see sharp reductions in the U.S. Fed’s stimulus program.

The gold industry and people in India are braced for a fall in supply and higher premiums ahead of festivals. The Indian Central Bank’s steps to restrict imports are expected to cut supplies for domestic consumption which is leading to huge black market activity and importation. There have been numerous reports in recent days of Indians being arrested in airports carrying gold coins and bars.

Recent media reports in China and Russia suggest that China is continuing to consider backing the yuan with gold. Since 2005, we have said that such a move by China was likely as China seeks to become a superpower and lessen and undermine U.S political dominance.

The US markets showed a substantial recovery over the course of the trading session on Friday after coming under pressure in morning trading. The volatility was seen over the course day. The major averages eventually ended the session slightly higher. Meanwhile, the majority of the European markets ended Friday’s session in the negative territory. Although the earnings picture brightened at the end of the trading week the investors were reluctant to take any positions ahead of the upcoming FOMC meeting this week and the U.S. jobs report for July.

Copper fell for a second straight day on Friday, as concerns about growth in top consumer China weighed on the outlook for industrial metals demand, but a weak dollar prevented further losses. Copper futures tumbled the most in 3-weeks, after China ordered companies in 19 industries to cut manufacturing capacity, signaling lower demand for industrial metals. Copper is trading at 3.099 down again this morning. The drop in demand for industrial metals combined with a lackluster demand for precious metals weighing on silver prices which are trading at 19.755 down by 16 pips this morning.

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