Earnings to Watch Next Week: Logitech, Goldman Sachs, NetFlix and IBM in Focus

Next week’s earnings are of much significance for major market movements as 2021 is believed to be a year of recovery on hopes of successful roll-out of the COVID-19 vaccine.

Earnings Calendar For The Week Of January 18

Monday (January 18)

IN THE SPOTLIGHT: LOGITECH INTERNATIONAL

Logitech International S.A., a Swiss-American manufacturer of computer peripherals and software, is expected to report a profit of $1.08 in the fiscal third quarter, which represents year-over-year growth of about 29% from the same quarter last year when the company reported 84 cents per share.

The Lausanne-based company’s revenue to grow over 35% year-over-year to $1.23 billion from $902.69 million in the same period last year.

“We are bullish into Logitech‘s F3Q21 earnings report next week as our December quarter checks point to a better than the expected market environment, most notably for PC peripherals. We’d be buyers into the print and raise our PT to $113 (from $106) to account for recent peer multiple expansion,” noted Erik Woodring, equity analyst at Morgan Stanley.

Tuesday (January 19)

IN THE SPOTLIGHT: GOLDMAN SACHS, NETFLIX

GOLDMAN SACHS: New York-based leading global investment bank is expected to report a profit of $7.33 in the fourth quarter, which represents year-over-year growth of about 56% from the same quarter last year when the company reported $4.69 per share. The bank’s revenue is expected to dip 4.9% from the year-ago quarter to $9.47 billion.

“As market volatility and the urgency around capital raising activity (both equity and debt) subside in 2021, we expect total revenues decline 11% y/y from a strong 2020. We are valuing the group on normalized 2023 EPS. While we still see 15%+ upside to Goldman Sachs (GS) based on this methodology, we see even more upside elsewhere in the group, particularly in consumer finance stocks which have been under more pressure,” said Betsy Graseck, equity analyst at Morgan Stanley.

“This drives our Underweight rating. Over time, we expect GS can drive some multiple expansion as management executes on its multi-year strategic shift towards higher recurring revenues.”

NETFLIX: California-based global internet entertainment service company is expected to report a profit of $1.35 in the fourth quarter, which represents year-over-year growth of about 4% from the same quarter last year when the company reported $1.30 per share. The streaming video pioneer’s revenue is expected to surge over 20% from the year-ago quarter to $6.60 billion.

“We expect paid net adds to come in the above guide, helped by ongoing shutdowns & seasonal strength. Our view is supported by our positive proprietary 4Q20 survey data, which implies rising pricing power into year-end. We tweaked estimate’s & introduced ’21 quarters; in turn, our DCF-based price target rises to $650 from $625 prior; reiterate ‘Outperform’ rating,” said John Blackledge, equity analyst at Cowen and company.

NetFlix (NFLX) shares were +67% in ’20 alongside a pandemic surge, following massive sub beats in 1Q / 2Q respectively and 28.1MM total paid net adds in 1Q-3Q ’20, up 47% y/y. With consumers staying home amid colder weather & limited social activities, we expect Netflix engagement to remain high; meanwhile, to the extent, there is any NT pressure on UCAN paid subs from the 4Q US price increase, we would consider this a buying opportunity for NFLX shares as the co. grows the value prop alongside rising ARPU.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 19

Ticker Company EPS Forecast
PACW Pacwest Bancorp $0.67
CMA Comerica $1.18
ONB Old National Bancorp $0.38
SCHW Charles Schwab $0.65
GS Goldman Sachs $7.33
STT State Street $1.57
HAL Halliburton $0.15
FULT Fulton Financial $0.27
JBHT J B Hunt Transport Services $1.30
ZION Zions Bancorporation $1.01
PNFP Pinnacle Financial Partners $1.36
FNB FNB $0.24
UCBI United Community Banks $0.60
NFLX Netflix $1.35
IBKR Interactive Brokers $0.58
RNST Renasant $0.59
SBNY Signature Bank $2.91

Wednesday (January 20)

IN THE SPOTLIGHT: UNITEDHEALTH

UNITEDHEALTH: Minnesota-based health insurance and health care data analysis giant is expected to report a profit of $2.41 in the fourth quarter, which represents a year-over-year decline of about 40% from the same quarter last year when the company reported $3.90 per share.

The largest insurance company by Net Premiums is witnessing a slowdown in its international business as increased joblessness due to the COVID-19 pandemic has dented demand for commercial membership.

UnitedHealth Group is the number one Medicare Advantage player with 28% market share, the number two Medicare PDP player with 20% market share, and the number two commercial player with 15% market share. United’s model is enhanced via vertical integration with its OptumRx PBM platform, which is one of the three largest PBMs in the country,” wrote Ricky Goldwasser, equity analyst at Morgan Stanley.

“With a large lead in the breadth of services offerings and considerable exposure to government businesses, UnitedHealth is well-positioned for any potential changes in the US healthcare system. A strong balance sheet and continued solid cash generation give flexibility for continued M&A.”

United Airlines is expected to report a deep loss in the fourth quarter due to the COIVD-19 pandemic, which harmed demand for travel.

Ohio-based Tide detergent and Pampers diaper manufacturer Procter & Gamble is expected to report an increase in profits on rising demand for home care and laundry products amid the COIVD-19 pandemic.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 20

Ticker Company EPS Forecast
UNH UnitedHealth $2.41
PG Procter & Gamble $1.51
ASML Asml $2.96
MS Morgan Stanley $1.30
USB US Bancorp $0.95
BK Bank Of New York Mellon $0.88
FAST Fastenal $0.33
CFG Citizens Financial $0.91
CBSH Commerce Bancshares $0.92
BOKF BOK Financial $1.92
FCEL Fuelcell Energy -$0.07
KMI Kinder Morgan $0.24
DFS Discover Financial Services $2.36
UAL United Airlines Holdings -$6.56
AA Alcoa $0.09
WTFC Wintrust Financial $1.41
UMPQ Umpqua $0.48
HWC Hancock Whitney Corp $0.90
PLXS Plexus $1.10
STL Sterling Bancorp $0.46
PTC PTC $0.65

Thursday (January 21)

IN THE SPOTLIGHT: IBM

IBM: Armonk, New York-based technology and consulting company is expected to report a profit of $1.81 in the fourth quarter, which represents a year-over-year decline of over 60% from the same quarter last year when the company reported $4.71 per share.

“For 2020, IBM refrained from providing any guidance, citing business uncertainty. Nevertheless, management stated that the fourth quarter is a seasonally strong quarter. The company is witnessing robust pipelines across hybrid cloud and data platform, AI solutions, in Cognitive Apps business driven by strength in Cloud Paks and Security, cloud-based transformation services in GBS segment, and App modernization offerings,” noted analysts at ZACKS Research.

“Also, management is banking on advancement in Red Hat “actual backlog growth.” Moreover, gains from the rapid uptake of IBM z15 is anticipated to be a tailwind. The company also anticipates to end 2020 with reduced debt levels.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 21

Ticker Company EPS Forecast
UNP Union Pacific $2.24
TFC Truist Financial Corp $0.85
TAL TAL International $0.04
TRV Travelers Companies $3.16
BKR Baker Hughes Co $0.17
FITB Fifth Third Bancorp $0.68
NTRS Northern $1.49
MTB M&T Bank $3.02
KEY KEY $0.43
CTXS Citrix Systems $1.34
HOMB Home Bancshares $0.39
INDB Independent Bank $1.02
FBC Flagstar Bancorp $2.36
WBS Webster Financial $0.75
BKU BankUnited $0.71
WNS Wns Holdings $0.59
INTC Intel $1.10
IBM IBM $1.81
ISRG Intuitive Surgical $3.09
CSX CSX $1.01
PPG PPG Industries $1.58
SIVB SVB Financial $3.79
TCBI Texas Capital Bancshares $1.13
ASB Associated Banc $0.30
PBCT People’s United Financial $0.32
OZK Bank Ozk $0.78
WAL Western Alliance Bancorporation $1.33
BKRKY Bank Rakyat $0.17
MTCH Match Group $0.50
MTG MGIC Investment $0.37
STX Seagate Technology $1.13

Friday (January 22)

Ticker Company EPS Forecast
EDU New Oriental Education Tech $0.26
ABBV AbbVie $2.86
HON Honeywell International $2.00
SLB Schlumberger $0.17
KSU Kansas City Southern $1.93
RF Regions Financial $0.42
HBAN Huntington Bancshares $0.29
ALLY Ally Financial $1.05
FHN First Horizon National $0.28
HRC Hill-Rom $1.05
NEP Nextera Energy Partners $0.39
IBN Icici $0.14
TOP Topdanmark A/S kr3.63

 

Gold Sheared, Silver Smeared

160121_gold_scoreboard

But relax: have a cracker ‘n schmear, perhaps even a beer, and we’ll try to relate to making it all clear.

To be sure — given all that we and you from here to Kalamazoo fundamentally understand about Gold – its moving lower in the ongoing financial environment makes nary a wit of sense whatsoever. The market is never wrong by traders having put price where ’tis, irrespective of its going the wrong way.

And given the fundamental precious-metals-positive state of essentially everything, ’tis diabolical that price descend.

Indeed as Gold leaped out of the gate to commence the New Year by gaining +3.2% (and Silver +6.0%) within the first three trading days, it struck us that our call for a Gold high this year of 2401 may have been too conservative. And from the “Under-State and Over-Deliver Dept.”, such 2401 forecast may still be too conservative even given the present pullback.

Either way, Gold settled out the week yesterday (Friday) at 1828 … which is but half the above Scoreboard’s debasement valuation of 3644. Moreover, ’tis before President-to-be-Biden rolls out his nearly $2 trillion instant COVID/economic relief plan, which with Congress now all “blue” ought pass right through.

“But even that is already priced into Gold, right mmb?”

Of course ’tis, Squire, just as always is everything. (Pity the poor trader who thinks he has it all figured out before anyone else does: “Take a seat at the back of the bus, buddy…”).

And again, please spare us the argument that bits**t is the modern alternative to Gold. Cryptocrap — which within two trading days just fell -27% — ain’t fallin’ into our lap.

And again (again), the fundamental stance for Gold we continue to view as 100% positive given the ever-burgeoning levels of the 3Ds (Debasement, Debt, Derivatives), the declining Economic Barometer (as we’ll below show), COVID clearly not contained (nor the effects of its vaccines preordained), and the endless spending of even more $trillions beyond the initial $2 trillion under Biden/Harris/Congressional reign!

So: why has Gold been declining? Reprise: the technical stance for Gold may merely be viewed as price having leapt too far too fast, as least by its recent deviation above the 300-day moving average.

To wit: since the start of the millennium we’ve had 5,043 trading days. Therein, Gold has settled more than 10% above its 300-day moving average a fair amount of the time: 1,697 days, to be precise (or one-third of days overall). That alone is a testament to the price of Gold rising over the long-term whilst all of the aforementioned fundamentals reduce the value of the faux dough Dollar.

In commencing 2021, so swift was Gold’s up move that price found itself nearly 13% above its 300-day moving average. And from the year 2001-to-date, Gold’s average price decline within three months upon a deviation of greater than 10% above that average is -6.2% (the standard deviation being 4.9%). So with Gold recently settling at 1954 (05 January), ’twas +12.6% above said average. A -6.2% decline from there puts price at 1833, (the recent low being 1817). ‘Course, hardly have three months yet to ensue: thus let’s further subtract the standard deviation which puts price down to 1739. On verra, but a positive Gold stance by the fundamentals belies such demise.

Besides, as we saw a week ago, Gold’s weekly parabolic trend has flipped from Short to Long, dubious as it appears on the following graphic of the price bars from one year ago-to-date. The wiggle room between the rightmost blue dot (1771) and present price (1828) is but 57 points, somewhat daunting as Gold’s “expected weekly trading range” is now 72 points. Thus the new Long trend is within range of being Short-lived.

And to quickly flip back to Short would leave any fundamentalist further flabbergasted. The point is: the Gold Bull ought not be put out of sorts should the lower 1700s be tested. Indeed, Gold appears to be structurally supported in the 1792-1673 range, but we don’t honestly find any rationale for price to venture there.

160121_gold_weekly

‘Course, the Dollar has actually been getting a bit of a bid to start the year, which in turn is why the BEGOS Markets year-to-date ain’t lookin’ all that great, the sole exception being Oil which typically shall slide during a Dollar up-glide. (Speaking of Oil for those of you who follow the website’s Market Rhythms page, the 12-hour MACD study looks to confirm a negative crossing in starting the new week). Otherwise, through these first 10 trading days of 2021, Gold as we below see is thus far the weakest of the five primary components which comprise BEGOS:

160121_begos_markets

In trying to ferret it all out from the FinMedia, one may be better off with a shot of tequila. Try these “back-to-back” readings from the Dow Jones Newswires: “…the labor market is losing momentum amid rising coronavirus cases…” (followed by) “…This Could Be the Best Year on Record for Job Growth. Gains are expected to be driven by a re-emerging economy…” That must have come from their “Now and Then Dept.”

Or try this FinTimes and Reuters bit: “…JPMorgan, Citigroup and Wells Fargo cite increased certainty on vaccines and improving economic outlook…” (followed by) “…U.S. Labor Market Losing Speed as COVID-19 Spirals Out of Control…”

And we know throughout history that such opposing opinions when elicited as policy result as follows:

160121_deux_locos

And it appears that the S&P finally is beginning to crack, the “live” price/earnings ratio being essentially a record — indeed stratospheric — 78.7x and our “textbook” technicals reaching “extremely overbought” this past Tuesday into Wednesday. ‘Tis right in line as we’ve written of late that the S&P “is horribly due for a massive crash”.

Even a terrific Q4 Earnings Season would hardly right this ship: bottom lines ought need triple to-quadruple just to get the P/E in line with any acceptable historical norm. And hardly is the economy helping: beyond December’s improvements in Industrial Production and Capacity Utilization, the month’s Retail Sales actually shrank whilst Import and Export Prices rose. Can you say “stagflation”? As well, January’s New York Empire State Index sported its weakest reading since July.

Then we’ve Cleveland FedPrez “Jump Back” Loretta Mester pointing to the StateSide economy’s needing strong 2021 government support, (and you know ’tis coming in $trillions: Got Gold?) Chiming in, too, is overall FedHead Jerome Powell stating the road to recovery for jobs is long with open-ended easy money to remain available. Again: Got Gold?

Still, not everyone has got Gold (now that is to Under-State) nor are stocking up en masse as we turn to our two-panel graphic of Gold’s daily bars from three months ago-to-date on the left and those for Silver on the right. Problematic for both markets is their respective sets of “Baby Blues” falling below the 0% axis, meaning that the 21-day linear regression trends have rotated from positive to negative: Sheared and smeared, indeed:

160121_gold_silver_dots

And as for the past fortnight — which is year-to-date — both precious metals obviously find themselves near the bottom of their respective 10-day Market Profiles:

160121_gold_silver_profiles

We’ll sum it up here with the stack:

The Gold Stack

  • Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3644
  • Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
  • Gold’s All-Time Closing High: 2075 (06 August 2020)
  • 2021’s High: 1963 (06 January)
  • The Gateway to 2000: 1900+
  • 10-Session “volume-weighted” average price magnet: 1887
  • Trading Resistance: (most immediate) 1843 / 1849 / 1859
  • Gold Currently: 1828, (expected daily trading range [“EDTR”]: 34 points)
  • Trading Support: none per the 10-day Market Profile
  • 10-Session directional range: down to 1817 (from 1963) = -146 points or -7.4%
  • 2021’s Low: 1817 (11 January)
  • The Final Frontier: 1800-1900
  • The Northern Front: 1800-1750
  • The Weekly Parabolic Price to flip Short: 1771
  • On Maneuvers: 1750-1579
  • The 300-Day Moving Average: 1745 and rising
  • The Floor: 1579-1466
  • Le Sous-sol: Sub-1466
  • The Support Shelf: 1454-1434
  • Base Camp: 1377
  • The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
  • Neverland: The Whiny 1290s
  • The Box: 1280-1240

Next week is lite for incoming economic data and brings joyous relief for the media in welcoming the 46th President of the United States via an Inauguration replete with virtual festivities. But ’tis said the 47th President in terms of time may not be far behind. So let the StateSide and geo-political schmear unfold whilst you fortify your financial well-being with Gold!

160121_25th_sec3

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

The Week Ahead – U.S Politics, Monetary Policy, Economic Data, and COVID-19 in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 73 stats in focus in the week ending 22nd January. In the week prior, 46 stats had been in focus.

For the Dollar:

It’s a quiet week ahead on the economic data front.

In a shortened week, there are no material stats to consider in the 1st half of the week.

Through Thursday, Philly FED Manufacturing PMI and weekly jobless claims figures are in focus.

With market attention to labor market conditions, expect the jobless claims to have the biggest impact. Another jump in jobless claims would likely weigh on riskier assets.

At the end of the week, prelim private sector PMI figures for January wrap things up.

Housing sector data also due out in the week will likely have a muted impact on the Dollar and risk sentiment.

The Dollar Spot Index ended the week up by 0.75% to 90.772.

For the EUR:

It’s a busy week ahead on the economic data front.

On Tuesday, January ZEW Economic Sentiment figures for Germany and the Eurozone kick things off.

Germany’s ZEW Economic Sentiment indicator will likely be the key driver.

The focus will then shift to January prelim private sector PMI numbers on Friday. France, Germany, and the Eurozone’s private sectors will be in the spotlight on.

Expect Germany’s manufacturing and the Eurozone’s composite to be the key drivers.

Finalized December inflation figures for member states and the Eurozone, also due out in the week, will likely have a muted impact on the EUR.

On the monetary policy front, the ECB is in action on Thursday. No moves are expected, leaving the press conference as the key driver. Questions on the economic outlook are likely as EU member states extend lockdown periods.

The EUR ended the week down by 1.11% to $1.2082.

For the Pound:

It’s a relatively busy week ahead on the economic calendar. Key stats include December inflation and retail sales figures, CBI industrial trend orders, and prelim January private sector PMIs.

Expect the retail sales figures and services PMI, due out on Friday, to have the greatest influence.

Away from the economic calendar, COVID-19 news will also influence. Following the vaccine approvals, the markets will be looking for new COVID-19 cases to begin abating.

On the monetary policy front, BoE Governor is scheduled to speak on Wednesday.

The Pound ended the week up by 0.16% to $1.3590.

For the Loonie:

It’s a busy week ahead on the economic calendar.

Key stats include December inflation and November retail sales figures due out on Wednesday and Friday.

Other stats include housing stats, manufacturing and wholesale sales figures. We would expect these stats to have a muted impact on the Loonie, however.

On the monetary policy front, the BoC is in action on Wednesday. With the markets expecting the BoC to hold rates steady, the rate statement and press conference will be the key drivers.

From elsewhere, economic data from China and private sector PMIs from the Eurozone and the U.S will also influence.

Expect COVID-19 news updates and chatter from Capitol Hill to also provide direction.

The Loonie ended the week down by 0.24% to C$1.2732 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a busier week on the economic data front.

Consumer sentiment figures for January are due out on Wednesday.

With consumer confidence key to fueling a pickup in consumer spending and an economic recovery, expect Aussie Dollar sensitivity to the numbers.

On Thursday, December employment figures will also provide direction ahead of retail sales figures on Friday.

Economic data from China and private sector PMI numbers from the U.S and the Eurozone will also influence.

COVID-19 news updates will remain a key driver in the week. however.

The Aussie Dollar ended the week down by 0.70% to $0.7703.

For the Kiwi Dollar:

It’s a quiet week ahead on the economic calendar.

In the 1st half of the week, 4th quarter business confidence and electronic card retail sales figures are in focus on Tuesday.

At the end of the week, Business PMI and 4th quarter inflation figures wrap things up.

Expect business confidence, retail sales, and 4th quarter inflation figures to be the key drivers.

The Kiwi Dollar ended the week down by 1.51% to $0.7133.

For the Japanese Yen:

It is a busy week ahead.

Finalized November industrial production figures get things going on Monday.

On Thursday, December trade figures will draw plenty of attention. With the COVID-19 pandemic continuing to wreak havoc, weak numbers could test market risk appetite.

At the end of the week, December inflation figures and prelim private sector PMIs for January wrap things up. The PMI numbers should have greater influence at the end of the week.

On the monetary policy front, the BoJ is in action on Thursday.

The Japanese Yen ended the week up by 0.09% to ¥103.85 against the U.S Dollar.

Out of China

It’s also a busy week ahead.

December industrial production and 4th quarter GDP numbers are due out on Monday. These will be the key stats of the week.

Other stats include fixed asset investment, retail sales, and unemployment figures. Barring dire numbers, however, these stats should have limited impact on market risk sentiment.

On Wednesday, the PBoC is also in action. However, the markets are not expecting any moves.

The Chinese Yuan ended the week down by 0.10% to CNY6.4809 against the U.S Dollar.

Geo-Politics

U.S Politics

It’s a busy week on Capitol Hill.

Inauguration Day and Trump’s impeachment will draw interest.

COVID-19

Vaccination rates and availability of vaccines will be key areas of interest.

An upward trend in vaccination rates and a downward trend on infection rates would support optimism towards an economic recovery.

Corporate Earnings

A number of big names deliver results in the week ahead.

From the U.S

These include:

Bank of America (Tues)

Goldman Sachs Group (Tues),

Netflix (Tues)

United Airlines (Wed)

Morgan Stanley (Wed)

Intel Corp. (Thurs).

The Weekly Wrap – COVID-19, Economic Data, and U.S Stimulus Weigh on Riskier Assets

The Stats

It was a relatively busy week on the economic calendar, in the week ending 15th January.

A total of 46 stats were monitored, following 61 stats from the week prior.

Of the 46 stats, 21 came in ahead forecasts, with 17 economic indicators coming up short of forecasts. There were 8 stats that were in line with forecasts in the week.

Looking at the numbers, 17 of the stats reflected an upward trend from previous figures. Of the remaining 29 stats, 23 reflected a deterioration from previous.

For the Greenback, it was a 2nd consecutive weekly gain, with the Dollar Spot Index rising by 0.75% to $90.772. In the previous week, the Dollar had risen 0.18% to 90.098.

Out of the U.S

It was a relatively busy week on the economic data front.

It was a quiet 1st half of the week, however, with stats limited to JOLTs job openings and inflation figures.

While job openings fell in November, inflation held steady, with the annual rate of core inflation holding at 1.6%.

Consumer prices rose by 0.4%, month-on-month, while core consumer prices increased by a modest 0.1%.

In a busy 2nd half of the week, key stats included the weekly jobless claims, retail sales, and consumer sentiment figures.

Jobless claims figure disappointed on Thursday, with initial jobless claims jumping from 784k to 965k.

In December, core retail sales slid by 1.4%, with retail sales falling by 0.7%, both following on from declines in November.

Consumer sentiment figures also disappointed.

According to prelim figures, the Michigan Consumer Sentiment Index fell from 80.7 to 79.2.

The downside was limited, however, supported by COVID-19 vaccines and hopes of a bipartisan shift.

The survey noted that the fall was minor when considering the sharp rise in COVID-19 related deaths, insurrection, and Trump’s impeachment.

Other stats included industrial production, NY Empire State Manufacturing, and business inventory figures. These stats had limited impact on the markets, however.

On the monetary policy front, FED Chair Powell assured the markets that rates were not going up any time soon. The FED Chair also stated that there would be no tapering of bond purchases near-term.

In the equity markets, the NASDAQ and the S&P500 slid by 1.54% and by 1.48% respectively. The Dow fell by a more modest 0.91%.

Out of the UK

It was a relatively busy week on the economic data front.

Monday through Thursday economic data was limited to BRC retail sales and RICS house price figures.

Retail sales rose by a further 4.8% in December, following a 7.7% rise in November according to the BRC.

House prices were also on an upward trend, with the RICS house price balance coming in at 65%. While down marginally from October’s 66%, upward pressure on house prices is expected to remain.

At the end of the week, industrial and manufacturing production and GDP figures were in focus.

In November, industrial production fell by 0.1%, following a 1.1% rise in October. Manufacturing production rose by 0.7%, following a 1.6% increase in October. Both fell short of forecasts.

GDP figures were not much better. In November, the economy contracted by 2.6% reversing 0.4% growth from October. On a 3-month rolling basis, the economy grew by 4.1%, slowing from a 10.2% to October.

Trade data released on Friday had a muted impact on the Pound, however. In November, the trade deficit widened from £13.29bn to £16.01bn, with the non-EU deficit widening from £5.82bn to £8.01bn.

Away from the economic calendar, a pickup in vaccination rates in the UK offset the negative sentiment towards lockdown measures.

In the week, the Pound rose by 0.16% to $1.3590. In the week prior, the Pound had fallen by 0.76% to $1.3568. A 0.72% slide on Friday pared some of the gains from earlier in the week.

The FTSE100 ended the week down by 2.00%, partially reversing a 6.39% gain from the previous week.

Out of the Eurozone

It was a relatively quiet week on the economic data front.

Industrial production and trade figures for the Eurozone, together with full year GDP numbers for Germany were in focus.

It was a mixed set of numbers for the EUR and the European majors.

For the Eurozone, industrial production jumped by 2.5% in November, following a 2.3% increase in October.

Trade data disappointed, however, with the trade surplus narrowing from €30.0bn to €25.8bn in November. Weak numbers were expected, however, following Germany’s trade data from last week.

While economic data from Germany has been impressive of late, GDP figures disappointed.

For the full year 2020, the economy contracted by 5.0%, following 0.6% growth in 2019. Economists had forecasted a 5.1% fall, however, which limited the damage.

ECB President Lagarde had spoken the day before the release of the GDP numbers. Lagarde continued to stand by the ECB’s economic forecasts, in spite of the extended lockdown measures in the EU. Lagarde pointed out that the forecasts had factored in lockdowns through the 1st quarter.

At the end of the week, finalized inflation figures for France and Spain had a muted impact on the EUR.

On the monetary policy front, the ECB’s monetary policy meeting minutes also failed to move the dial in the week.

For the week, the EUR slid by 1.11% to $1.2082. In the week prior, the EUR had risen by 0.02% to $1.2218.

For the European major indexes, it was a bearish week. The EuroStoxx600 fell by 0.81%, with the CAC40 and DAX30 sliding by 1.67% and 1.86% respectively.

A continued spike in new COVID-19 cases weighed. Across the EU, member states were reporting particularly low vaccination rates that added to the negative mood.

For the Loonie

It was a particularly quiet week on the economic data front. There were no material stats to provide the Loonie with direction.

At the start of the week, the BoC’s Business Outlook Survey failed to move the dial.

Market optimism, fueled by expectations of a sizeable U.S stimulus package, had supported crude oil prices and the Loonie.

A Friday sell-off, however, left the Loonie in the red. Concerns over the COVID-19 pandemic and market reaction to the Biden stimulus package weighed on riskier assets.

In the week ending 15th January, the Loonie fell by 0.24% to C$1.2732. In the week prior, the Loonie had risen by 0.2% to C$1.2702.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar, following solid gains from the previous week.

In the week ending 15th January the Aussie Dollar fell by 0.70% to $0.7703, with the Kiwi Dollar ended the week down by 1.51% to $0.7133.

For the Aussie Dollar

It was a quiet week on the economic calendar.

November retail sales, building permit, and new home loan figures were in focus in the week.

Retail sales impressed in November, supported by an easing of containment measures in Victoria. Sales jumped by 7.1%, following a 1.4% rise in October.

Building permits rose by 2.6%, following a 3.3% increase in October, with new home loans surging by 5.5%.

Home loans hit a record high mid-way through the 4th quarter.

From elsewhere, trade data from China also provided support, with imports and exports on the rise in December.

For the Kiwi Dollar

It was also a particularly quiet week on the economic calendar.

There were no material stats from New Zealand to provide the Kiwi Dollar with direction.

For the Japanese Yen

It was a relatively quiet week on the economic calendar. Core machinery orders were in focus in the week.

Month-on-month, orders rose by 1.5% in November, following October’s 17.1% surge. Economists had forecast a 6.2% slide. Year-on-year, orders were down by 11.3%, after having risen by 2.8% in October. Economists had forecast a more severe 15.4% slump.

The stats ultimately had a muted impact on the Japanese Yen, however. COVID-19 news and chatter from Capitol Hill remained key drivers in the week.

The Japanese Yen rose by 0.09% to ¥103.85 against the U.S Dollar. In the week prior, the Yen had fallen by 0.72% to ¥103.94.

Out of China

Inflation and trade data for December were in focus.

The stats were skewed to the positive, supporting riskier assets in the week.

Inflationary pressures returned at the end of the year, with consumer prices rising by 0.7%, month-on-month. In November, consumer prices had fallen by 0.6%. As a result, consumer prices were up by 0.2% year-on-year, partially reversing a 0.5% decline from November.

Wholesale deflationary pressures also eased at the end of the year.

Trade data was more impressive, however, with exports surging by 19.1% following a 21.1% jump in November. Imports increased by 6.5%, leading to a widening in the USD trade surplus from $75.4bn to $78.16bn.

While the stats were positive, a spike in new COVID-19 cases in China was a concern in the week.

In the week ending 15th January, the Chinese Yuan fell by 0.10% to CNY6.4809. In the week prior, the Yuan had risen by 0.81% to CNY6.4746.

The CSI300 slipped by 0.68%, while the Hang Seng ended the week up by 2.50%.

Gold Price Futures (GC) Technical Analysis – Longer-Term Support Zone at $1780.50 – $1705.20 Next Target Area

Gold futures are down sharply on Friday and the market is headed for its second consecutive weekly loss as a surge in the U.S. Dollar dampened demand for the dollar-denominated asset. The dollar was on track to post its biggest weekly gain against a basket of major currencies since October 2020.

At 21:32 GMT, February Comex gold futures are trading $1825.70, down $25.70 or -1.39%.

Traders said one catalyst behind the strength in the U.S. Dollar was data showing the COVID-19 pandemic’s continuing toll on the economy, which boosted the dollar’s appeal as a safe-haven asset.

Daily February Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1817.10 will signal a resumption of the downtrend. The main trend will change to up on a move through $1962.50.

The minor trend is also down. The minor trend will change to up on a move through $1864.00. This will also shift momentum to the upside.

The short-term range is $1767.20 to $1962.50. Its 50% level at $1864.90 is resistance.

The minor range is $1962.50 to $1817.10. Its 50% level at $1889.80 is another potential resistance level.

The next downside target is a major long-term retracement zone at $1780.50 to $1705.20.

Short-Term Outlook

Given the downtrend and the downside momentum, we think the gold market is headed for a retest of the long-term 50% to 61.8% retracement zone at $1780.50 to $1705.20. This zone stopped the selling at $1767.20 on November 30.

On the upside, the series of lower tops since last year’s top at $2099.20 is pretty clear. They come in at $2032.50, $2008.50, $1991.60, $1973.30 and $1962.50. Unless the buying is strong enough to overcome these levels, we should continue to see downside pressure.

Long-term traders are looking for value so we could see buyers step in on a test of $1780.50 to $1705.20. They are banking of the Fed to keep interest rates at historically low levels until at least 2023.

Short-term traders are getting punished, however, by rising U.S. Treasury yields. Over the short-run, gold should remain under pressure as long as yields remain attractive enough to draw investment capital away from non-yielding gold.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Prediction – Price Slide as the Dollar Rallies Despite Weak U.S. Retail Sales

 

Gold prices dropped on Friday as the dollar gained traction while U.S. yields fell. This decline followed a weaker than expected U.S. retail sales report and December PPI, which was in line with expectations. After breaking out earlier in the month, gold prices have reversed course and are poised to test target support.

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Technical analysis

Gold prices slide on Friday and are testing an upward sloping trend line that comes in near 1,825. A close below this level would lead to a test of the November lows at 1,764. Short-term momentum has reversed and turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 16, below the oversold trigger level of 20. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) line generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line). The MACD histogram is printing in the red with a downward sloping trajectory, which points to lower prices. The RSI also broke down which reflects accelerating negative momentum.

Retail Sales Fall

U.S. retail sales dropped in  December as lockdowns to battle the spread of COVID-19 undercut spending. According to the U.S. Commerce Department, Retail sales dropped 0.7% last month. Data for November was revised down to show sales declining 1.4% instead of 1.1% as previously reported. Expectations had been for retail sales to be unchanged in December.

Week In Review: Trump Impeached Again, $1.9T Stimulus & Gold

Despite only being the second full trading week of 2021, there was plenty on the plate that kept market players on their toes. Fed officials were under the spotlight at the start of the week, especially after Atlanta Fed President Raphael Bostic stated that US interest rates could be hiked by mid-2022 or early 2023.

Focus shifted towards the Dollar as rising US government yields injected DXY bulls with enough inspiration to punch above 90.50.

“Although the Dollar is experiencing a technical rebound, the upside may be capped by the ‘reflation trade’ and the Fed’s ultra-accommodative monetary stance.”

Our technical outlook focused on Gold, which displayed cracks under the Dollar’s rebound. After struggling to shake off the nasty hangover from last Friday’s selloff, the metal found itself under the mercy of an appreciating Dollar. Overall, it was a choppy trading week for Gold as prices struggled to break away from the sticky $1850 level.

“Could the precious metal be waiting for a fresh fundamental catalyst?”

Fears around growing political risk gripped sentiment on Tuesday after Democrats introduced a resolution to impeach U.S President Donald Trump for a second time. Trump was later impeached by the House on Wednesday, marking a first in history as no president has ever been impeached twice.

In the United Kingdom, Governor Bailey downplayed talk of negative interest rates as he believed ‘there are still lots of issues’ with cutting rates below zero. Buying sentiment towards Sterling improved following the statement with the GBPUSD pushing against the stubborn 1.3700 resistance level. A weekly close above this level may open the doors to further upside in the week ahead.

In our earnings preview, we covered JPMorgan and possibility of delivering positive results on trading revenues. On Friday afternoon, the bank posted much stronger-than-expected fourth-quarter earnings as investment banking profits surged. Earnings per share smashed expectations by rising $3.79, exceeding the $2.62 per share forecast while revenues hit 30.16 billion exceeding the $28.65 billion estimate.

Despite the earnings beat, JPMorgan shares retreated from near all-time highs. Although prices are trading around $138.22 as of speaking, the bank’s shares are still up almost 9% year-to-date.

As the week slowly came to an end, the mood across markets was mixed as investors waited for US President-elect Joe Biden to reveal his plans for a COVID-19 relief package. It was no surprise that markets offered a muted reaction to his $1.9 trillion fiscal stimulus plan given how a lot of the optimism surrounding another injection of fiscal stimulus was priced in.

“The week ahead promises to be filled with fresh volatility and market action as investors grapple with the growing list of themes influencing global markets.”

Expect global equity bulls to find support from the ‘reflation trade’ while fears around surging coronavirus cases and lockdown restrictions may spur appetite for safe-haven assets. In the currency markets, it will be interesting to see whether the Dollar will appreciate further and if Gold is able to find a fresh catalyst to breakout or down.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Gold Weekly Price Forecast – Gold Markets Trying to Stabilize

Gold markets have had a little bit of a rough week, as traders continue to determine whether or not there is going to be a significant stimulus package coming out the United States. Ultimately, there will be but there has been some questioning of the size of the stimulus package, perhaps not as big as the $1.9 trillion that Joe Biden is hoping to achieve. If that is going to be the case, then it makes quite a bit of sense that the market is still kind of treading water in general, trying to figure out what to do next. I believe that the 50 week EMA underneath will offer a significant amount of support, and I do think that eventually we will go looking towards the top of the weekly candlestick from the previous week. This does not mean that it is easy to get there though.

Gold Price Predictions Video 18.01.20

Ultimately, this is a market that I think eventually will find buyers jumping into pick up gold “on the cheap”, due to the fact that there is a certain amount of stimulus coming from everywhere going forward, and it certainly looks as if the $1750 level could be a massive support level as well. Furthermore, it would simply be a pullback and 38.2% on the Fibonacci retracement tool, which typically means that there should be quite a bit of momentum over the longer term to continue the trend. At this point, I would wait for some type of supportive candlestick in order to get involved, and then start aiming for the highs again. I do believe that this is what gold will do over the next year or so.

For a look at all of today’s economic events, check out our economic calendar.

Gold Price Forecast – Gold Markets Sensitive to 10 Year Note

Gold markets initially tried to rally during the trading session on Friday but gave back the gains as we continue to see a lot of noise in general, as the bond markets are all over the place. That of course does have an effect on the gold markets, due to the fact that both are considered to be a safety trade at points in time. That being said, from a technical analysis standpoint we are still very much in the consolidation area that we have been in, with the 200 day EMA underneath offering a certain amount of support. Furthermore, we have the $1800 level that could cause support as well, as the US dollar has recovered a bit during the trading session.

Gold Price Predictions Video 18.01.21

As interest rates rise in the United States due to ten-year note selling, this can make the US dollar somewhat attractive due to the fact that the interest rates offered in the bond markets can be a much more reliable investment than something like gold. That being said, there are still a lot of concerns out there when it comes to the idea of the global economy, and therefore we could get a bit of a “safety trade” piling into this market. To the upside I see the 50 day EMA as still offering resistance, just as the $1900 level above will. After that, then we would go looking towards the $1960 level. As far as selling is concerned, I still do not really have much of an argument for doing so quite yet, as I see a lot of support just below the $1800 level.

For a look at all of today’s economic events, check out our economic calendar.

Silver Price Daily Forecast – Silver Is Losing Ground Ahead Of The Weekend

Silver Video 15.01.21.

Silver Is Under Pressure As Gold/Silver Ratio Moves Higher

Silver managed to get below the 50 EMA at $25.20 and is trying to settle below the support at $25.00 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is currently testing the nearest resistance level at 90.50. This resistance level has already been tested many times in recent trading sessions and proved its strength. If the U.S. Dollar Index manages to settle above 90.50, it will gain upside momentum and get to the test of the next resistance level at 90.70 which will be bearish for silver and gold price today.

Meanwhile, gold continues to trade near the $1850 level. Gold has already made several attempts to settle above this level in recent trading sessions but these attempts yielded no results. If gold manages to settle below the nearest support level at $1830, silver will find itself under pressure.

Gold/silver ratio managed to get above the 20 EMA at 72.80 and gained strong upside momentum. Currently, gold/silver ratio is testing the resistance at the 50 EMA at 74.30. In case gold/silver ratio gets above the 50 EMA, it will gain additional upside momentum which will be bearish for silver.

Technical Analysis

silver january 15 2021

Silver declined below the 50 EMA at $25.20 and is currently testing the support level at $25.00. RSI is in the moderate territory so there is plenty of room to gain additional downside momentum.

If silver declines below the support at $25.00, it will move towards the next support level at $24.70. A successful test of this level will push silver towards the support at $24.50. In case silver settles below the support at $24.50, it will head towards the next support level which is located at $24.25.

On the upside, the 50 EMA at $25.20 will likely serve as the first resistance level for silver. The next resistance is located at $25.30. If silver gets above the resistance at $25.30, it will head towards the next resistance level at $25.55. This level has been tested many times in recent trading sessions so silver will likely need additional upside catalysts to settle above $25.55.

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Friday, Jan. 15 – Gold Still Going Sideways

The gold futures contract lost 0.19% on Thursday, as it extended its short-term consolidation following last week’s Friday’s sell-off of 4.1%. In late November the market has reached new local low below $1,800 price level. Since then it has been retracing the decline. Last week, the yellow metal got closer to its early November local high but then it has retraced the whole advance, as we can see on the daily chart ( the chart includes today’s intraday data ):

Gold is 0.1% lower this morning, as it is extending the short-term consolidation. What about the other precious metals? Silver gained 0.90% on Thursday and today it is 1.2% lower. Platinum gained 1.41% and today it is 2.5% lower. Palladium gained 1.09% and today it’s 1.0% lower. So precious metals are lower this morning.

Yesterday’s Unemployment Claims release has been worse than expected at 965,000. Today we will get the Retail Sales release at 8.30 a.m. The main number is expected to be unchanged vs. the previous one.

Where would the price of gold go following last week’s Friday’s Nonfarm Payrolls announcement? We’ve compiled the data since September of 2018, a 28-month-long period of time that contains of twenty eight NFP releases.

The following chart shows the average gold price path before and after the NFP releases for the past 28 months. The market was usually 0.37% higher on the 10th day after the NFP release.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for today:

Friday, January 15

  • 8:30 a.m. U.S. – Retail Sales m/m , Core Retail Sales m/m , PPI m/m, Core PPI m/m, Empire State Manufacturing Index
  • 9:15 a.m. U.S. – Industrial Production m/m, Capacity Utilization Rate
  • 10:00 a.m. U.S. – Preliminary UoM Consumer Sentiment, Preliminary UoM Inflation Expectations, Business Inventories m/m

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Price of Gold Fundamental Daily Forecast – Set Up for Volatile Move as Traders Await Next Catalyst

Gold futures are trading flat shortly before the regular session opening on Friday as traders try to make sense of a number of mixed economic news that have held prices in a tight range for much of the week. Traders are saying gold is being supported by fresh coronavirus-led lockdowns in Europe and on dovish policy cues from the U.S. Federal Reserve, while gains are being capped by firm Treasury yields.

At 12:41 GMT, February Comex gold futures are trading $1847.70, down $3.70 or -0.20%. This is down from an intraday high of $1856.60.

Helping to provide some confusion for traders is the higher U.S. Dollar, which is trading slightly under its high for the week. Traders were hoping that the dollar would weaken after President-elect Joe Biden unveiled his economic relief plan on Thursday night because a weaker dollar is good for gold prices, but that didn’t happen. This is probably because it will be weeks before the plan is debated in Congress as Washington politicians deal with the distractions of a second impeachment of President Trump.

Coronavirus Concerns

Traders are concerned about the failure to get to the other side of the pandemic after months of celebrating the creation of a number of vaccines. The vaccine rollout is not moving fast enough for some, which is helping to create a bid in the market.

Furthermore, tighter lockdowns in Germany and France as well as new COVID-19 restrictions in China cut into optimism about a global economic recovery.

Gains Capped by Firm Benchmark Yields

Despite the market being underpinned by COVID concerns, buyers are not chasing gold higher because benchmark 10-year Treasury yields remain close to 10-month highs reached earlier in the week. This is helping to support the U.S. Dollar, which is dampening foreign demand for dollar-denominated gold.

Fed’s Powell Provides Some Support for Gold

The gold market found some support from comments from the U.S. Federal Reserve Chairman on Thursday after he suggested no change in interest rates. U.S. Federal Reserve Chair Jerome Powell said an interest rate hike would not be coming anytime soon and pushed back against suggestions that it might taper bond purchases.

Daily Forecast

Gold prices are consolidating because the fundamentals are mixed. In other words, there are no strong catalysts to push prices in either direction at this time. The chart pattern suggests volatility may be just around the corner, however.

In order to get gold prices moving to the upside it’s going to need help from Treasury yields and the U.S. Dollar. Yields are going to have to start declining and the dollar is going to have to resume its downtrend.

We may not get a clear signal on either until the Fed meets at the end of the month. Therefore, a prolonged sideways trade is a strong possibility.

For a look at all of today’s economic events, check out our economic calendar.

Yearly Analysis: Will 2021 Be Better for Gold?

After a disastrous year of 2020, which brought about the COVID-19 pandemic , the Great Lockdown , and the economic crisis the question is what will 2021 be like – both for the U.S. economy and the gold market.

To provide an answer, below I analyze the most important economic trends for the year and their implications for the yellow metal.

  1. Society gains herd immunity by vaccination and the health crisis is overcome.
  2. With herd immunity approaching, the social fabric returns to normality, and the economy recovers.
  3. The vaccine rollout increases the risk appetite, reducing the safe-haven demand for both gold and the greenback .
  4. The return to normality and realization of the pent-up demand (comeback of spending that was put on hold during the U.S. epidemic ) accelerates the CPI inflation rate .
  5. The Fed stays accommodative, but the recovery in the GDP growth and the labor market makes the U.S. monetary policy less aggressively dovish than in 2020.
  6. However, the Fed continues to use all of its tools to support the economy in 2021 and, in particular, it does not hike the federal funds rate , even if inflation rises.
  7. As a result, the real interest rates stay at ultra-low levels. However, the potential for further declines, similar in scale to 2020, is limited, unless inflation jumps.
  8. The American fiscal policy also remains easy, although relative to 2020, government spending declines, while the budget deficit narrows as a share of the GDP.
  9. However, the public debt burdens continue to rise. Although the ratio of debt to GDP decreased in Q3 2020 amid the rebound in the GDP, it’s likely to increase further in the future, especially if Congress approves the new fiscal stimulus.
  10. Given the dovish Fed conducting a zero-interest rate policy , increasing debt burden, and strengthened risk appetite amid the vaccine rollout, the U.S. dollar weakens further. The American currency has already lost more than 11 percent against a broad basket of other currencies since its March peak.

What does this macroeconomic outlook imply for the gold prices? This is a great question, as some of the trends will be supportive for the yellow metal, while others might constitute headwinds, and some factors could theoretically be both positive and negative for the price of gold. For instance, the end of the recession seems to be bad for the yellow metal, but gold often shines during the very early phase of an economic recovery, especially if it is accompanied by reflation , i.e., a return of inflation.

The tailwinds include the continuation of easy monetary and fiscal policies . The federal debt will remain high, while the interest rates will stay low, supporting the gold prices, as was the case in the past (see the chart below).

There is also an upward risk of higher inflation. In such a macroeconomic environment, the U.S. dollar should weaken against other currencies, thus supporting gold prices . As a reminder, the relative strength of the greenback in recent years (see the chart below) limited the gains in the precious metals market.

However, there are also headwinds . You see, levels are significantly different concepts than changes. The latter often matter more for the markets. What do I mean? Well, although both monetary and fiscal policies will remain accommodative, they will be less accommodative than in 2020. Although the real interest rates should stay very low, they will not decline as much as last year (if at all).

In other words, the economy will normalize this year after suffering a deep downturn in 2020, so the economic policy will be less aggressive. Hence, the level of bond yields and the ratio of federal debt to GDP should stabilize somewhat – actually, thanks to the rebound in the GDP in the third quarter of 2020, the share of public indebtedness in the U.S. economy has decreased, as the chart below shows.

Hence, although the price of gold could be supported by the continuation of easy monetary and fiscal policies, low real interest rates, and weak dollar, it’s potential to rally could be limited. The accommodative stance of central banks and unwillingness to normalize the monetary policy for the coming years should prevent a significant bear market in gold , but without any fresh triggers of further declines in the bond yields or without the spark of inflation, the great bull market is also not very likely. So, unless we either see a serious solvency crisis or sovereign debt crisis , or an substantial acceleration in inflation, gold may enter a sideways trend . Or it can actually go south, if it smells the normalization of monetary policy or increases in the interest rates.

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Effective Investment through Diligence & Care.

 

Gold Price Futures (GC) Technical Analysis – Short-Term Consolidation Indicating Impending Volatility

Gold futures are trading flat early Friday while consolidating inside a tight range for a fifth session. The price action suggests investor indecision and impending volatility. The catalysts underpinning prices are the Federal Reserve’s dovish monetary policy stance and the substantial U.S. pandemic relief package announced by President-elect Joe Biden Thursday evening.

At 07:45 GMT, February Comex gold futures are trading $1849.90, down $1.50 or -0.08%.

Daily February Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but the consolidating chart pattern suggests momentum may be getting ready to shift to the upside.

A trade through $1817.10 will signal a resumption of the downtrend. The main trend will change to up on a move through $1962.50.

The minor trend is also down. A trade through $1864.00 will change the minor trend to up. This will shift momentum to the upside.

The short-term range is $1767.20 to $1962.50. Its 50% level at $1864.90 is resistance.

The minor range is $1962.50 to $1817.10. Its 50% level at $1889.80 is the first upside target. It’s also a potential trigger point for an acceleration to the upside.

The main upside target zone is $1933.20 to $1972.40. On the downside, the major long-term support zone is $1780.50 to $1705.20.

Daily Swing Chart Technical Forecast

The direction of the February Comex gold market on Friday is likely to be determined by trader reaction to $1864.90.

Bearish Scenario

A sustained move under $1864.90 will indicate the presence of sellers. If this move creates enough downside momentum then look for sellers to take out $1817.10. This could trigger a sharp break into $1780.50 then $1767.20.

Bullish Scenario

A sustained move over $1864.90 will signal the presence of buyers. This is a potential trigger point for a surge into $1889.80. Since the main trend is down, sellers could come in on the first test of this level. Taking out this level could trigger an acceleration to the upside with the first target $1933.20.

For a look at all of today’s economic events, check out our economic calendar.

US Stock Futures Edge Lower as Biden Unveils Stimulus Plan; Major Banks Set to Kickoff Earnings Season

The major U.S. stock index futures are edging lower in the pre-market session on Friday as investors digested the details of President-elect Joe Biden’s $1.9 trillion stimulus plan revealed Thursday evening local time.

In the early trade, futures tied to the benchmark S&P 500 Index were down 21.75 points. Futures associated with the blue chip Dow Jones Industrial Average were off by nearly 200 points and futures connected with the tech-driven NASDAQ Composite Index traded lower by about 45 points.

Biden’s American Rescue Plan

A quick recap of President-elect Joe Biden’s American Rescue Plan, includes increasing the additional federal unemployment payments to $400 per week and extending them through September, direct payments to many Americans of $1,400, and extending federal moratoriums on evictions and foreclosures through September.

The plan also calls for $350 billion in aid to state and local governments, $70 billion for COVID testing and vaccination programs and raising the federal minimum wage to $15 per hour.

Earnings Season Begins

On Friday, investors will get fresh looks at major banks as Wells Fargo, Citigroup and JPMorgan Chase report their fourth quarter earnings.

JPMorgan kicks off fourth-quarter earnings season for big banks on Friday at about 12:00 GMT, followed by releases from Wells Fargo and Citigroup.

Earnings expectations for the fourth quarter have been on the rise, thanks to climbing interest rates and expectations for solid trading and investment banking results.

The biggest U.S. banks (with the exception of Wells Fargo) all saw per-share earnings estimates jump by at least 8% in the past month, according to Barclays analysts Jason Goldberg.

Thursday US Stock Market Recap

Wall Street closed lower on Thursday after turning down late in the session as reports emerged about U.S. President-elect Joe Biden’s pandemic aid proposal following earlier data that showed a weakening labor market.

Of the 11 major S&P sectors, only four closed higher with economically-sensitive energy, up 3%, showing the biggest percentage gains as oil prices rose. The biggest percentage decliner on the day was the information technology sector.

The domestically-focused small-cap Russell 2000 Index closed up 2%, while the Dow Jones Transports Index ended up 1% after both sectors, which are seen as big beneficiaries of stimulus, scaled all-time highs during the day.

Helping the transport index was a 2.5% rise in shares of Delta Air Lines after Chief Executive Ed Bastian forecast 2021 to be “the year of recovery” after the coronavirus pandemic prompted its first annual loss in 11 years.

The S&P 1500 Airlines Index closed up 3.4%.

The Philadelphia Semiconductor Index also hit a record high with a big boost from Taiwan Semiconductor Manufacturing Co Ltd. The chip manufacturer’s U.S. shares closed up 5% after it announced its best-even quarterly profit and raised revenue and capital spending estimates.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stock Market Overview – Stocks Consolidate Ahead of Biden Speach

U.S. stocks moved lower on Thursday. Sectors in the S&P 500 index were mixed, led by gains in Energy, the interest-rate sensitive utility sector underperformed. Rates moved higher and the dollar was flat along with gold. President-elect Joe Biden is expected to unveil details on his proposed spending package to support the U.S. economy. Many investors are counting on additional stimulus to help make ends meet, given the pandemic’s damaging impact. Unemployment claims an unexpected rose. Blackrock delivered better than expected financial results, ahead of Friday’s bank earning release deluge. Jerome Powell was on the tape today, saying he won’t raise rates to combat higher grain and energy prices.

Unemployment Claims Unexpected Rose

According to the Labor Department, U.S. jobless claims rose by 181,000 to 965,000 last week. That was the most significant weekly increase since March 2020 and put initial jobless claims at their highest level since mid-August. It also put weekly claims well above the roughly 800,000 a week they have averaged in recent months. Additionally, continuing claims rose to nearly 5.3 million for the week ended January 2, from 5.1 million a week earlier. That marked the first weekly increase since November.

Blackrock Delivers on Top and Bottom Line

BlackRock’s financial results showed profits rose 19% as investors turned to the money-management giant’s funds through election uncertainty. The investment company posted Q4 profit of $1.5 billion, or $10.02 a share, up from $1.3 billion, or $8.29 a share, a year earlier. BlackRock’s revenue rose 13% to about $4.5 billion in Q4.

Powell Takes Dovish Tone

Federal Reserve Chairman Jerome Powell affirmed his commitment to keeping interest rates low. Powell said the Fed is nowhere near a point where they could consider raising interest rates. During the discussion, Powell spoke about how the Fed handled the challenges brought on by the Covid-19 pandemic.

Gold Price Prediction – Prices Trade Sideways Despite Weak Claims Data

Gold prices continued to consolidate as the dollar began to slip. The dollar gained traction as the 10-year yield retraced some of its recent gains. U.S. Jobless claims grew more than expected, which put downward pressure on yields. Jerome Powell did a live interview saying that the Fed would not raise rates to curtail the rise in inflation from grain and oil prices. Germany reported that 2020 GDP contracted by about 5% last year.

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Technical analysis

Gold prices moved sideways, again running into resistance near the  50-day moving average near 1,865. Support is seen near an upward sloping trend line that comes in near 1,815.  Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 23, just above the overbought trigger level of 20. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) line generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line). The MACD histogram is printing in the red with a downward sloping trajectory, which points to lower prices.

Unemployment Claims Unexpected Rose

According to the Labor Department, U.S. jobless claims rose by 181,000 to 965,000 last week. That was the most significant weekly increase since March 2020 and put initial jobless claims at their highest level since mid-August. It also put weekly claims well above the roughly 800,000 a week they have averaged in recent months. Additionally, continuing claims rose to nearly 5.3 million for the week ended January 2, from 5.1 million a week earlier. That marked the first weekly increase since November.

Gold Price Forecast – Gold Markets Continue to Look at Supported

Gold markets have initially fallen during the trading session but then turned around to show signs of support at the 200 day EMA yet again, due to the fact that the interest rates in the United States are all over the place or another. This is due to massive amounts of stimulus coming, which has people selling off bonds, driving up the interest rates. As a knock on effect, the US dollar has been gaining a bit on the occasion, and this of course has a huge “knock on effect” in the gold market. In other words, we are all over the place but at this point in time I think that we are trying to stabilize a bit in order to turn around and go higher.

Gold Price Predictions Video 15.01.21

If we can break above the $1860 level, then it opens up a move towards the $1900 level, followed by a move towards the $1960 level. At this point, I have no interest in shorting the gold market, and I do think that we are seeing an attempt to reestablish the uptrend. If we do break down below the $1750 level, then it is possible that we could break down rather significantly. It is not until then that I am concerned about the gold market, and I do think that this is a market that will continue to be noisy, but I think that a lot of safety will be desired out there, so with the easy money policy I do think that eventually becomes the focus of gold traders.

For a look at all of today’s economic events, check out our economic calendar.

Price of Gold Fundamental Daily Forecast – Next Move Hinges Upon Powell’s Comments on QE Taper Timing

Gold futures are consolidating on Thursday for a fourth session as the dollar steadied and U.S. Treasury yields held near 10-month highs, with markets waiting for a speech by Federal Reserve Chairman Jerome Powell at 17:30 GMT and President-elect Joe Biden to reveal details of his stimulus plan.

At 14:54 GMT, February Comex gold is trading $1845.40, up $0.70 or +0.04%.

Investors are focused on U.S. Federal Reserve Chair Jerome Powell’s participation in a virtual event for further clues on U.S. monetary policy. The Fed said on Wednesday that the U.S. economy was gaining pace modestly, although rising coronavirus cases kept a lid on optimism.

Non-yielding gold is seen as a hedge against inflation likely to result from large stimulus measures.

Optimism over a report that Biden could launch a $2 trillion aid package for coronavirus relief pushed benchmark 10-year Treasury yields towards a 10-month high. Rising yields helped drive the U.S. Dollar higher, reducing foreign demand for dollar-denominated gold.

COVID-19, Renewed Benefits Boost US Weekly Jobless Claims

The number of Americans filing first-time applications for unemployment benefits surged last week, confirming a weakening in labor market conditions as a worsening COVID-19 pandemic disrupts operations at restaurants and other businesses.

Initial claims for state unemployment benefits increased 181,000 to a seasonally adjusted 965,000 for the week-ended January 9, the highest since late August. Economists polled by Reuters had forecast 795,000 applications in the latest week.

A stalling labor market recovery could put pressure on the incoming Biden administration for a bigger relief package. Joe Biden will take over from President Donald Trump next Wednesday. He is expected to propose stimulus of as much as $2 trillion on Thursday. The government approved nearly $900 billion in additional relief at the end of December.

Short-Term Outlook

Traders are hoping Fed Chair Powell discusses monetary policy in today’s Princeton Economics’ webinar. Most importantly, traders are looking for clarification of the central bank’s stance after all the recent debate on the taper timeline.

On Monday, Atlanta Fed President Raphael Bostic said he sees a possible interest rate hike as soon as the second half of next year or early 2023. The estimate is well out of consensus for the Fed, whose policymakers estimated in December that no hikes would happen through 2023.

However, Bostic noted that growth is almost entirely at the mercy of how quickly Americans are vaccinated and the coronavirus contained.

On Wednesday, despite optimism over vaccines and the likelihood of more fiscal stimulus under the incoming Biden administration, the Federal Reserve is sticking with its super-easy monetary policy, policymakers made clear on Wednesday.

Gold prices are likely to move higher on Thursday if Powell favors sticking with the super-easy monetary policy. Price could fall further if the Fed Chair fells the economy is recovering faster than previously expected.

For a look at all of today’s economic events, check out our economic calendar.

Higher Yields Hit Gold, But for How Long?

Last week, the yellow metal tanked below $1,900 again, and it hasn’t rebounded since the plunge – instead, the price of gold has stayed at around $1,850.

What happened? The main driver of the recent weakness in the precious metals market has been the Democratic victory in the Georgia Senate elections. Thanks to this trifecta, the Democrats have taken control of the White House, the House of Representatives, and the Senate. Consequently, there are lower chances of a political gridlock in Washington and higher chances of smooth cooperation between Congress and the incoming administration of Joe Biden. So, the expectations of additional economic support have risen, thereby strengthening hopes for a quicker economic recovery.

Hence, investors went euphoric and increased their risk appetite. They sold safe havens such as gold and disposed of treasuries, pushing the bond yields higher (see the chart below), which in turn hurt the yellow metal .

However, the interest rates are still historically low, and the real interest rates remain deeply in negative territory. Although some measure of normalization is standard, the return to pre-pandemic levels is unlikely . The unprecedented increase in worldwide debt implies that we are stuck in a high debt and low interest rate trap. After all, all these debts have been sustainable only because the yields have been low, so I doubt whether we will see an important rebound in them.

But the recent episode shows how sensitive gold is to the changes in the real interest rates and that gold investors  shouldn’t forget about the possibility of an increase in the real interest rates, which is a serious downward risk for gold.

Implications for Gold

Is gold doomed now, given that the Democrats swept both the White House and Congress? Not necessarily. The macroeconomic outlook for 2021 might be worse than for 2020, as the economy should recover and monetary policy should be less dovish – but it’s still positive for gold. After all, historically, gold has shined during the early phases of various economic recoveries. Some analysts even claim that we have not reached the phase of an economic recovery yet – as the liquidity crisis has transformed into a solvency crisis.

In other words, it’s always important to distinguish the short-term outlook from the longer-term potential. Gold currently suffers because of the higher yields, but the long-term picture seems to be more positive. The real interest rates, which are more important for the precious metals market, have increased to a lesser extent – and they have stayed well below zero (as the chart above shows).

At some point, investors will start factoring in that a large fiscal stimulus projected by the Democrats could increase the public debt to uncomfortable levels, thereby increasing the risk of a sovereign debt crisis . They could also begin pricing in the risk of higher inflation and a larger Fed’s balance sheet , as the U.S. central bank and the Treasury wouldn’t welcome much higher interest rates . As a reminder, gold benefited from the easy fiscal policy in the aftermath of the first wave of the coronavirus pandemic , so it shouldn’t go out of favor now. Indeed, the huge fiscal deficit combined with the current account deficit will take the so-called twin deficit to a record 25 percent of the GDP , which shouldn’t be without an impact on the price of gold.

Instead, gold still has a material upside in the upcoming months, although it could shine less brightly than it did last year , at least until inflation rebounds, or until the Fed expands its accommodative monetary stance. Yes, the U.S. central bank remains dovish, but it’s not eager right now to shoot from its bazooka again. So, the monetary policy will be relatively more hawkish than it was in 2020, which could limit potential gains in the gold market.

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For a look at all of today’s economic events, check out our economic calendar.

Arkadiusz Sieron, PhD
Sunshine Profits: Effective Investment through Diligence & Care