Gold Fundamental Analysis April 26, 2012, Forecast

Analysis and Recommendations:

Gold continues to flounder with no direction having small gains and losses in today’s session. The shiny metal is currently down at 1638.75.

Markets are waiting for the FOMC rate decision and statement later today.

The main event this week—the Federal Open Market Committee meeting/Ben Bernanke press conference—concludes later on Wednesday, which has overshadowed everything else.

The Federal Open Market Committee is expected to only tweak its economic forecasts at its two-day meeting this week, keeping all its options on the table given cross currents in recent economic data, analysts say.

Economic Data April 25, 2012 actual v. forecast

 

PLN

 

 

 

Polish Unemployment Rate 

13.30%

 

13.40% 

 

13.50% 

 

 

 

GBP

 

 

 

GDP (QoQ) 

-0.2%

 

0.1% 

 

-0.3% 

 

 

 

GBP

 

 

 

GDP (YoY) 

0.0%

 

0.3% 

 

0.5% 

 

 

 

GBP

 

 

 

CBI Industrial Trends Orders 

-8

 

-6 

 

-8 

 

 

 

USD

 

 

 

Core Durable Goods Orders (MoM) 

-1.1%

 

0.5% 

 

1.9% 

   

 

USD

 

 

 

Durable Goods Orders (MoM) 

-4.2%

 

-1.7% 

 

1.9% 

   

 

USD

 

 

 

Interest Rate Decision 

0.25%  

 

0.25% 

 

0.25% 

 

 

 

Economic Events scheduled for April 26, 2012 that affect the European and American Markets

TBD        EUR        Consumer Price Index (YoY) (Apr)                                          
The Germany consumer price index released by the Statistiches Bundesamt Deutschland measures the average price change for all goods and services purchased by households for consumption purposes. CPI is the main indicator to measure inflation and changes in purchasing trends.

TBD        EUR        Consumer Price Index (MoM) (Apr)                                       

The Germany consumer price index released by the Statistiches Bundesamt Deutschland measures the average price change for all goods and services purchased by households for consumption purposes. CPI is the main indicator to measure inflation and changes in purchasing trends

06:00     EUR        Retail Sales (MoM) (Mar)                                                                                           

The Retail Sales released by the Statistiches Bundesamt Deutschland is a measure of changes in sales of the German retail sector. It shows the performance of the retail sector in the short term. Percent changes reflect the rate of changes of such sales. The changes are widely followed as an indicator of consumer spending

06:00     EUR        Retail Sales (YoY) (Mar)                                                                                                              

The Retail Sales released by the Statistiches Bundesamt Deutschland is a measure of changes in sales of the German retail sector. It shows the performance of the retail sector in the short term. Percent changes reflect the rate of changes of such sales. The changes are widely followed as an indicator of consumer spending.

08:30     GBP       BBA Mortgage Approvals (Mar)                                                                               

The Mortgage Approvals published by the British Bankers’ Association (BBA)measure the number of home loans issued by the BBA during the previous quarter. It is considered as a leading indicator of the UK Housing Market. A Mortgage growth represents a healthy housing market that stimulates the overall UK economy

09:00     EUR        Consumer Confidence (Apr)                                                                                      

The Consumer Confidence released by the European Commission is a leading index that measures the level of consumer confidence in economic activity. A high level of consumer confidence stimulates economic expansion while a low level drives to economic downturn.

09:00     EUR        Economic Confidence (Apr)                                                                                       

The Euro Zone Economic Confidence released by the European Commission is a survey of consumers confidence in economic activity. It indicates the trend of the overall Euro Zone economy.

09:00     EUR        Industrial Confidence (Apr)                                                                                       

The Industrial Confidence released by the European Commission is an index that measures the level of industrial executives confidence in economic activity. The survey asks about orders and buildup of inventories. A high level of industrial confidence stimulates economic expansion while a low level drives to economic downturn.

23:01     GBP       Gfk Consumer Confidence (Apr)                                                             

The GfK Group Consumer Confidence is a leading index that measures the level of consumer confidence in economic activity. A high level of consumer confidence stimulates economic expansion while a low level drives to economic downturn

Just a heads up since gold is volatile and will react to most economic indicators we will begin to post the daily calendar with events that could affect the price of gold. The gold price is sensitive to a number of scheduled U.S. and Euro area macroeconomic announcements—including retail sales, non-farm payrolls, and inflation. Gold’s high sensitivity to real interest rates and its unique role as a safe-haven and store of value typically leads to a counter-cyclical reaction to surprise news, in contrast to their commodities. It also shows a particularly high sensitivity to negative surprises that might lead financial investors to become more risk averse.  

These results have a number of implications. To reduce the uncertainty of the return on gold transactions, traders may wish to time their orders flow so as to avoid the release of information that has been shown to affect prices. For longer-term market participants, these results provide confirmation of the pro-cyclical bias of many commodities and gold’s role as a safe-haven during periods of economic uncertainty.

Gold Forecast April 25, 2012, Technical Analysis

The gold markets rose a bit for the Tuesday session as the markets retained some semblance of risk appetite around the globe. The rising gold prices shouldn’t be taken too seriously though, as the Federal Reserve’s press conference in the afternoon part of the US session will more than likely have an effect on this market. The failure of the FMOC to mention need for further quantitative easing would more than likely have a somewhat muted but negative effect on this commodity. After all, this wouldn’t be a total surprise. 

However, if the Fed does mention easing, this market should skyrocket as the Dollar would undoubtedly be hit overall. The odds are that they won’t but on a day like this one – it is often best to be out of the gold markets as they are very volatile to these announcements in general. 

Gold Forecast April 25, 2012, Technical Analysis
Gold Forecast April 25, 2012, Technical Analysis

Gold Fundamental Analysis April 25, 2012, Forecast

Analysis and Recommendations:

Gold moved up today and is trading at 1642.95 but still below last week’s level.

Gold prices rose on Tuesday as a softer tone to the dollar and news of more central bank buying stopped the previous session’s slide, but traders largely stuck to the sidelines ahead of a key monetary policy meeting of the US Federal Reserve.

The main event this week—the Federal Open Market Committee meeting/Ben Bernanke press conference—kicks off today and concludes tomorrow, which may overshadow [other] releases.

The Federal Open Market Committee is expected to only tweak its economic forecasts at its two-day meeting this week, keeping all its options on the table given cross currents in recent economic data, analysts say.

 The precious metal has shed more than 2% of its value so far this month after declining in both February and March, hurt by a 1,3% rise in the dollar as the worsening euro zone debt crisis knocked the euro.

But gains in the dollar have proved fragile, with the euro clawing back some of the previous session’s losses on Tuesday to rise 0.4%, as a debt sale in the Netherlands produced solid results even a day after the Dutch government collapsed.

The story for gold is unchanged, whether you’re looking at the fundamentals, which have underpinned the market from the year 2000, or the premium on gold attached to the economic crisis.

The dollar is coming out of the mire first, and that has weighed on gold and on speculators’ patience, but on a longer-term view, nothing has changed.

Economic Reports for April 24, 2012 actual v. forecast

 

AUD

 

CPI (QoQ) 

0.1%

 

0.6% 

 

0.0% 

 

 

 

AUD

 

Trimmed Mean CPI (QoQ) 

0.3%

 

0.6% 

 

0.6% 

 

 

 

EUR

 

Finnish Unemployment Rate 

7.50%

 

 

 

7.40% 

 

 

 

HUF

 

Hungarian Retail Sales (YoY) 

-1.40%

 

0.60% 

 

0.60% 

 

 

 

SEK

 

Swedish Unemployment Rate 

7.70%

 

8.00% 

 

7.80% 

 

 

 

EUR

 

Industrial New Orders (MoM) 

-1.3%

 

-0.5% 

 

-2.9% 

   

 

CAD

 

Core Retail Sales (MoM) 

0.5%

 

1.0% 

 

-0.8% 

   

 

CAD

 

Retail Sales (MoM) 

-0.2%

 

0.2% 

 

0.2% 

   

 

USD

 

CB Consumer Confidence 

69.2

 

69.7 

 

69.5 

   

 

USD

 

New Home Sales 

328K

 

320K 

 

353K 

   

 

Economic Events scheduled for April 25, 2012 that affect the European and American Markets

09:30     GBP       GDP (YoY)                                                                                           0.3%       0.5%

Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.

11:00     GBP       CBI Industrial Trends Orders                                                       -20                          -8

The Confederation of British Industry (CBI) Industrial Trends Orders measures the economic expectations of the manufacturing executives in the U.K. It is a leading indicator of business conditions. A level above zero indicates order volume is expected to increase; a level below zero indicates expectations are for lower volumes. The reading is compiled from a survey of about 550 manufacturers.        

13:30     USD       Core Durable Goods Orders (MoM)                                        0.5%                      1.8%

Core Durable Goods Orders measures the change in the total value of new orders for long lasting manufactured goods, excluding transportation items. Because aircraft orders are very volatile, the core number gives a better gauge of ordering trends. A higher reading indicates increased manufacturing activity.

13:30     USD       Durable Goods Orders (MoM)                                                   -1.5%                     2.4%       

Durable Goods Orders measures the change in the total value of new orders for long lasting manufactured goods, including transportation items.

 17:30    USD       Interest Rate Decision                                                                                                  

Federal Open Market Committee (FOMC) members vote on where to set the rate. Traders watch interest rate changes closely as short-term interest rates are the primary factor in currency valuation

Government Bond Auctions (this week)

Apr 25  09:10  Sweden  Auctions T-bills

Apr 25  09:30  Germany  Eur 3.0bn new Jul 2044 Bund

Apr 25  14:30  Sweden  Details nominal bond auction on May 02

Apr 25  17:00  US  Auctions 5Y Notes

Apr 26  00:30  Japan  Auctions 2Y JGBs

Apr 26  09:10  Italy   BOT auction

Apr 26  14:30  Sweden  Details I/L bond auction on May 03

Apr 26  17:00  US  Auctions 7Y Notes

Apr 27  09:10  Italy   BTP/CCTeu auction

Gold Forecast April 24, 2012, Technical Analysis

The gold markets fell most of the session on Monday, only to bounce and form a nice looking hammer just below the often visited $1,640 level. The hammer forming suggests that perhaps there are buyers starting to step back into the market, and this makes sense as the longer-term trend is up.

The market looks as if the $1,700 level will be the biggest barrier in the immediate future if it can break higher from this point. The biggest issues facing gold at the moment seem to have little to do with gold itself, but rather to do with the European Union and its problems. The financial crisis in that area seems to be the biggest focus as to the “risk attitude” of the financial markets on the whole, and it is because of that it will continue to be a choppy trade, regardless of which direction we head next.

The top of failure to push prices lower for any substantial amount of time does suggest that perhaps there is a lot of support underlying this market, and as it has been trending higher for over ten years this shouldn’t be any kind of surprise. As for us, we still stand by the thought that gold is going continue to rise over time. The real question is what kind of trader you are, as it will determine what kind of trading strategy you will want to employ.

No matter what kind, buying is the only thing that is feasible in this market. The question is if you are trading short term or long term. For the short term traders, there looks to be a bit of consolidation between current levels and the $1,700 level. For the longer term trader, this market is a buy every time it dips, using a pyramiding approach as you add small bit to the overall position over time. For us, we choose to have a core position that we can add to when price action warrants so. We certainly aren’t ready to sell, and until we see a sub-$1,600 daily close, it isn’t even a thought. 

Gold Forecast April 24, 2012, Technical Analysis
Gold Forecast April 24, 2012, Technical Analysis

A Hindu Holiday to Buy Gold

This Akshya Tritya, jewelers are depending more on the emotional sentiment for gold sales. After Dhanteras, this is the biggest gold buying festival in India. To celebrate the festival and boost sales amid record high gold prices, banks and jewelers alike have various discounts and offers for the consumers.

Their enthusiasm for the gold-buying festival although high, doesn’t come without slight hesitation concerning demand due to high prices for the precious metal.

HDFC Bank is optimistic about gold coin sales and investment in paper gold this season. “During these festivals one sees a lot of off take in terms of gold coins, banks also become aggressive in selling,” a senior official from HDFC Bank told Business Standard.

Gold prices are reigning high due to weak Asian and global equities. Investors are flocking to the safe-haven asset as risk aversion in the face of the ever-deepening Eurozone crisis, analysts comment. Despite this, jewelers and banks are confident about the sale of gold jewelry, paper gold and coins during the festival.

During 2011 Indian households continued to turn to gold as a store of wealth, with gold now accounting for 7% of household savings.

Despite gold touching a two-month high, jewelers are expecting about 15 tonnes of sale of the metal, This is 5% more than sales on last Akshya Tritya.

Gold Fundamental Analysis April 24, 2012, Forecast

Analysis and Recommendations:

Gold has been falling throughout today’s trading session to trade at this time at 1629.75 down -13.05. Gold and silver prices fell in electronic trade during Monday business hours in Europe, as the dollar rose on risk aversion amid worrying political developments in the euro zone and as China data showed continued contraction for the manufacturing sector.

Unabated concerns over Euro zone’s debt crisis and US economic releases postponed investor action. Investors have already digested the news of the stabilization of Chinese factories in April as output ticked higher. HSBC Flash Purchasing Managers Index showed China’s industrial activity recovered slightly to 49.1 in April from revious month’s 48.3. However investors will closely watch the US Federal Reserve’s policy meeting later in the week which may weigh in on US economic health. At the same time, as per reports, Indian gold traders are staying away from purchasing gold, despite the Akshya Tritya on Tuesday, as weak rupee made importing gold more expensive.

There is a clear division among the FOMC policy makers on when the Fed should start tightening monetary policy. Some policy makers have called for an exit and rate hikes as early as this year, while a couple of committee members felt that policy accommodation should continue until 2016. With some of the recent U.S. economic data beginning to show signs of weakness and forecasts predicting slower economic growth, it would not be surprising to see the Fed maintaining a dovish stance and expressing a cautious outlook on the economy and the labor market, but stopping short of announcing another round of quantitative easing at this meeting.

However, QE3 will not be completely out of the picture and will remain as a viable option, especially if the occasional soft spots in the U.S. economic data become a persistent trend of deteriorating economic conditions lasting for at least a couple of months. Although additional quantitative easing may not come until the second half of the year or simply not at all, the future fate of the U.S. dollar will continue to depend on QE3 expectations and the Fed’s next move.

The dollar rose amid increased political risk in Europe after the Socialist Party candidate for the French presidential election, Francois Hollande took a narrow lead in the first round of the country’s election. Far-right candidate Marine Le Pen finished a surprise third. French election results overnight confirmed that Nicolas Sarkozy and Francois Hollande will face one another in the final runoff election on May 6. Scotia’s European economics team notes that the market consequences of the results (albeit not unexpected) are likely to be not great. Mr Hollande has said that he wants to renegotiate the fiscal compact that was agreed by Mr Sarkozy. In particular, Hollande wants to create more pro-growth measures.  For France specifically, the underlying thrust (i.e. pace of tightening) of the domestic fiscal policy plans under Hollande would not be that different to Sarkozy. However, the emphasis is likely to be more dependent on tax hikes than spending cuts. 

Economic Data for April 23, 2012 actual v. forecast

 

AUD

 

 

 

PPI (QoQ) 

-0.3%

 

0.4% 

 

0.3% 

 

 

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

49.10

 

 

 

48.30 

   

 

EUR

 

 

 

French Business Survey 

95

 

96 

 

98 

   

 

EUR

 

 

 

French Manufacturing PMI 

47.3

 

47.2 

 

46.7 

 

 

 

EUR

 

 

 

French Services PMI 

46.4

 

50.2 

 

50.1 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

46.3

 

49.0 

 

48.4 

 

 

 

EUR

 

 

 

German Services PMI 

52.6

 

52.3 

 

52.1 

 

 

 

EUR

 

 

 

Manufacturing PMI 

46.0

 

48.2 

 

47.7 

 

 

 

EUR

 

 

 

Services PMI 

47.9

 

49.4 

 

49.2 

 

 

 

EUR

 

 

 

Italian Consumer Confidence 

89.0

 

96.5 

 

96.3 

   

 

TWD

 

 

 

Taiwanese Industrial Production (YoY) 

-3.4%

 

-6.8% 

 

8.4% 

 

 

 

EUR

 

 

 

German 12-Month Bubill Auction 

0.074%

 

 

 

0.077% 

 

 

 

CAD

 

 

 

Wholesale Sales (MoM) 

1.6%

 

-1.0% 

 

-1.1% 

   

 

EUR

 

 

 

French 3-Month BTF Auction 

0.090%

 

 

 

0.084% 

 

 

 

EUR

 

 

 

French 6-Month BTF Auction 

0.121%

 

 

 

0.119% 

 

 

 

EUR

 

 

 

French 12-Month BTF Auction 

0.250%

 

 

 

0.249% 

 

 

 

MXN

 

 

 

Mexican Retail Sales (YoY) 

7.6%

 

5.0% 

 

4.4% 

 

 

Economic Events scheduled for April 24, 2012 that affect the European and American Markets

07:00     EUR       Finnish Unemployment Rate                                                                     7.40%   

The unemployment rate represents the number of unemployed persons expressed as a percentage of the labor force. The unemployment rate for a particular age/sex group is the number of unemployed in that group expressed as a percentage of the labor force for that group. 

 10:00    EUR        Industrial New Orders (MoM)                                   -0.5%                     -2.3%

Industrial New Orders measures the change in the total value of new purchase orders placed with manufacturers. It is a leading indicator of production. A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

15:00     USD       CB Consumer Confidence                                            70.3                        70.8

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. 

15:00     USD       New Home Sales                                                             320K                      313K     

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated

Central Banks Take Center Stage

This is going to be a busy week for the central bank committees and the markets will be waiting on news, announcements and indications of what the banks are going to decide.

On Wednesday we will hear the Federal Open Markets Committee Interest Rate Announcement. There is a clear division among the FOMC policy makers on when the Fed should start tightening monetary policy.

Some policy makers have called for an exit and rate hikes as early as this year, while a couple of committee members felt that policy accommodation should continue until 2016. With some of the recent U.S. economic data beginning to show signs of weakness and forecasts predicting slower economic growth, it would not be surprising to see the Fed maintaining a dovish stance and expressing a cautious outlook on the economy and the labor market, but stopping short of announcing another round of quantitative easing at this meeting.

However, QE3 will not be completely out of the picture and will remain as a viable option, especially if the occasional soft spots in the U.S. economic data become a persistent trend of deteriorating economic conditions lasting for at least a couple of months. Although additional quantitative easing may not come until the second half of the year or simply not at all, the future fate of the U.S. dollar will continue to depend on QE3 expectations and the Fed’s next move.

Following the FOMC the markets will get news from the Reserve Bank of New Zealand. With the inflation gauge lower than expected, the global economy slowing and the EU debt crisis far from over, the Reserve Bank of New Zealand will not be in any hurry to start hiking rates and is expected to keep the benchmark interest rate at the current 2.50% level. The RNZ will try to anticipate the upcoming RBA move and also interpret the April 3rd decision.

The announcement that the markets have been waiting for will be heard on Friday when the  Bank of Japan offers their interest rate decision and statement. Everyone expects that the Bank of Japan will announce additional expansion of its quantitative easing operations, but not everyone is betting on the bank lifting its inflation target to 2%.

Such move would make sense, especially because in February the combination of more QE with a 1% inflation target has proven to be an effective tool in the Bank of Japan’s campaign to weaken the yen. Considering that a decision to make additional asset purchases may be already priced in, the Japanese central bank will need to deliver a “shock and awe” type of an announcement in order to trigger another leg of significant yen weakness.

A failure to do so could see the yen quickly erasing some of its recent losses against the U.S. dollar and other currency majors. It will be a difficult call for the bank, but they will be watching the FOMC release earlier in the week.

Gold Forecast April 23, 2012, Technical Analysis

The gold markets were very quiet on Friday as the $1,640 level continues to support this market. The 50 day EMA is just above the recent action, and this will continue to pressure the gold market to the downside. However, there is a massive uptrend line that coincides with the area just below, and because of this – we feel that the market is about to make a serious move. We prefer buying at this point, and will go long as soon as we get a hammer, or a long green candle. A close above the 50 day EMA is without a doubt a massively bullish signal as well. As for selling, we need a couple of sessions below the $1,600 level to feel comfortable doing so. 

Gold Forecast April 23, 2012, Technical Analysis
Gold Forecast April 23, 2012, Technical Analysis

Gold Forecast for the Week of April 23, 2012, Technical Analysis

The gold markets had a fairly quiet week as the market currently flirts with a long-term trend line. The trend line has been around since 2009, and a break of it would signal a significant move. The $1,600 level is starting to look more and more like a potential front line in the battle. The $1,640 level is holding as support so far, and because of this so far we are still bullish. However, we need some momentum to pick up this market. As long as we are above the uptrend line, we have to be either long or flat. We cannot sell unless we get a serious break below the line. We are buying dips at this point, and long green candles.

Gold Forecast for the Week of April 23, 2012, Technical Analysis
Gold Forecast for the Week of April 23, 2012, Technical Analysis

Gold Weekly Fundamental Analysis April 23-27, 2012, Forecast

Introduction: Gold prices always rise when there is uncertainty in the global economy. In times of uncertainty, investors tend to run towards gold. Suppose, rumors are flying high about some event in the world and this is increasing the uncertainty in the financial markets.

  • Gold reacts to uncertainty in the markets
  • Gold reacts to the Federal Reserve and monetary policy
  • A drop in major currencies can indicate a run into gold.
  • Remember investors tend to take profit from gold so watch for trading opportunities when investors are taking profits, not moving out of the markets.

 

Analysis and Recommendations:

Gold had a week of ups and downs, reacting to euro worries and poor eco data out of the US. Gold ended the week at 1643.65 after starting out the week at 1653.85. Gold has been looking for direction all week and has just hugged the 1650 price most of the week

As the weekends, worries over Euro Zone debt and economic growth in the US and China continue to grip commodities and were seen trading in a very tight range waiting for fresh cues for further directional moves. In a lackluster trading, spot gold held steady. Base metals in LME traded mostly flat as investors remained cautious after weak economic indicators from the U.S. Though, successful French and Spanish bond auction allayed concerns over Euro Zone’s deteriorating financial health to some extent. Unexpected rise in German business climate assessed by Ifo lifted the sentiments too. LME copper managed to hang above $8000 a ton.  In tandem with the international market, movements in MCX base metal complex and bullions were dreary.  Crude oil rose for the first time in three days supported by positive German data. Meanwhile, G-20 finance ministers and central bankers are to meet in Washington later today. The Indian rupee was seen bouncing off a 3-month low it hit during previous session at 52.11 up 0.17 percent

Market emotions remained rather subdued in the wake of persistent debt concerns in the Euro region in spite of a strong German business sentiment. Looking into the evening, no major economic data is slated for release. The ongoing G-20 finance minister’s meet in Washington would be the key event markets would be looking up to take cues from.  With Chinese economy going through a lean patch, possible Chinese Central bank liquidity action in the coming days could be a marquee event and have a real impact on the commodities.

Historical

High:     1916.20

Low:      1321.10

Economic Events: (GMT)

 EUR

 

Industrial New Orders (MoM)

 

-0.5%

-2.3%

 

 

 USD

 

New Home Sales

 

320K

313K

 

 

 USD

 

CB Consumer Confidence

 

70.3

70.8

 

 

 GBP

 

GDP (YoY)

 

0.3%

0.5%

 

 

 GBP

 

CBI Industrial Trends Orders

 

-20

-8

 

 

 USD

 

Durable Goods Orders (MoM)

 

-1.5%

2.4%

 

 

 USD

 

Core Durable Goods Orders (MoM)

 

0.5%

1.8%

 

 

 USD

 

Interest Rate Decision

 

 

 

 

 

 GBP

 

Nationwide Consumer Confidence

 

 

44

 

 

 GBP

 

CBI Distributive Trades Survey

 

-4

 

 

 

 CHF

 

KOF Leading Indicators

 

0.26

0.08

 

 

Gold Fundamental Analysis April 23, 2012, Forecast

Analysis and Recommendations:

Gold rose as the dollar pared gains, boosting demand for the precious metal as an alternative asset. The greenback was little changed against a basket of major currencies after climbing as much as 0.4 percent. Christine Lagarde, the managing director of the International Monetary Fund, said at a press briefing in Washington that she expects the resources of the IMF to be “significantly increased” amid Europe’s sovereign-debt crisis. Gold futures for June delivery rose 0.1 percent to settle at $1,643.85 an ounce at 1:50 p.m. on the Comex in New York. Earlier, the price dropped as much as 0.5 percent. Silver futures for May delivery gained 0.9 percent to $31.639 an ounce on the Comex. On the New York Mercantile Exchange, platinum futures for July delivery slid 0.1 percent to $1,578 an ounce, and palladium futures for June delivery rose 0.9 percent to $663.30 an ounce.

Gold also reacted to the Munich-based Ifo Institute’s German business confidence index rose to 109.9 in April from a reading of 109.8 in March, data showed Friday. Economists had forecast a decline to 109.5.

Economic Data for April 20, 2012 actual v. forecast

 

JPY

 

 

 

Tertiary Industry Activity Index (MoM) 

0.0%

 

0.8% 

 

-0.6% 

 

 

AUD

 

 

 

Import Price Index (QoQ) 

-1.2%

 

-1.0% 

 

2.5% 

 

 

 

EUR

 

 

 

German PPI (MoM) 

0.6%

 

0.4% 

 

0.4% 

 

 

 

EUR

 

 

 

German PPI (YoY) 

3.3%

 

3.1% 

 

3.2% 

 

 

 

EUR

 

 

 

German Ifo Business Climate Index 

109.9

 

109.5 

 

109.8 

 

 

 

EUR

 

 

 

German Current Assessment 

117.5

 

117.0 

 

117.4 

 

 

 

EUR

 

 

 

German Business Expectations 

102.7

 

102.5 

 

102.7 

 

 

 

GBP

 

 

 

Retail Sales (MoM) 

1.8%

 

0.5% 

 

-0.8% 

 

 

 

GBP

 

 

 

Retail Sales (YoY) 

3.3%

 

1.4% 

 

1.0% 

 

 

 

CAD

 

 

 

Core CPI (MoM) 

0.3%

 

 

 

0.4% 

 

 

 

CAD

 

 

 

CPI (MoM) 

0.4%

 

1.0% 

 

0.4% 

 

 

 

CAD

 

 

 

Leading Indicators (MoM) 

0.4%

 

1.0% 

 

0.7% 

   

 

CAD

 

 

 

CPI (YoY) 

1.9%

 

2.0% 

 

2.6% 

 

 

 

MXN

 

 

 

Mexican Unemployment Rate 

4.6%

 

4.9% 

 

5.3% 

   

 

Economic Events scheduled for April 23, 2012 that affect the European and American Markets

06:00:00               GBP       Nationwide Housing Prices n.s.a (YoY)                                             -0.90%

The Nationwide Housing Prices shows the value of the houses prices in UK and indicate current movements in the housing market that is considered as a sensitive factor to the UK’s economy. A high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or bearish).

 06:00:00              GBP       Nationwide Housing Prices s.a (MoM)                                                -1%

The Nationwide Housing Prices shows the value of the houses prices in UK and indicate current movements in the housing market that is considered as a sensitive factor to the UK’s economy. A high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or bearish).

 07:28:00              EUR        Purchasing Manager Index Manufacturing                                           48.4

The Manufacturing Purchasing Managers Index (PMI) released by the Markit economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in Germany. Normally, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.

 07:28:00              EUR        Purchasing Manager Index Services                                                     52.1

The Services PMI released by the Markit Economics interviews German executives on the status of sales, employment, and their outlook. Because the performance of the German service sector is extremely consistent over time, services does not impact final GDP figures as much as the more volatile figure on the manufacturing sector. Any reading above 50 signals expansion, while a reading under 50 shows contraction.

Just a heads up since gold is volatile and will react to most economic indicators we will begin to post the daily calendar with events that could affect the price of gold. The gold price is sensitive to a number of scheduled U.S. and Euro area macroeconomic announcements—including retail sales, non-farm payrolls, and inflation. Gold’s high sensitivity to real interest rates and its unique role as a safe-haven and store of value typically leads to a counter-cyclical reaction to surprise news, in contrast to their commodities. It also shows a particularly high sensitivity to negative surprises that might lead financial investors to become more risk averse.  

These results have a number of implications. To reduce the uncertainty of the return on gold transactions, traders may wish to time their orders flow so as to avoid the release of information that has been shown to affect prices. For longer-term market participants, these results provide confirmation of the pro-cyclical bias of many commodities and gold’s role as a safe-haven during periods of economic uncertainty.

Gold Forecast April 20, 2012, Technical Analysis

 

The gold markets went back and forth on Thursday as the risk attitude changed just as much as this candle would suggest. The Spanish bond auctions went off well enough for the session, (although the yields were a bit higher than the last auction) and this seemed to appease traders for the start of the day. However, as time went on for the day – the risk appetite faded as the stock markets in America fell. With all of this going on, the gold markets ended up unchanged and had formed a long-legged doji. Because of this, we think that the choppiness will continue although we prefer to buy as the fundamental picture still favors the yellow metal overall.

The central banks are net buyers of the market, and are known to be accumulating massive amounts for their reserves. Also, there is the massive easing that many of the world’s central banks continue with. The easing worldwide will continue to weigh on the overall appeal of the fiat currencies, and although they will continue to fluctuate back and forth between strength and weakness between the currencies – gold should continue to be needed as a hedge against this easing cycle.

The $1,640 level has held yet again, so it looks as if the market wants to bounce from this area yet again. However, as with many dojis, we take the signal on a break above the highs as a chance to buy. As for selling, we don’t see a case for doing it yet, although there is a bit of a downward channel. The $1,500 level is our “line in the sand”, and we aren’t interested in selling until we close below the level on a daily chart.

The recent action looks as if it is trying to build a bit of a base, and although the recent action hasn’t been overly bullish, the longer term trend is up. Because of this, we certainly do feel that the longer term move will continue to be positive. On signs of strength, we are willing to buy, not limited to, but certainly including, the above mentioned break above the top of Thursday’s candle.

Gold Forecast April 20, 2012, Technical Analysis
Gold Forecast April 20, 2012, Technical Analysis

GOLD GETS STUCK

Gold prices continued to hover at the 1650 range picking up a few dollars in early gains on Thursday, ending four days of losses after a widely-anticipated auction of Spanish debt supported the euro and appetite for so-called higher-risk assets like stocks and commodities.     

Prices remained range-bound looking for direction, as yields ticked higher on the longer dated paper than in a previous auction in January, with the shiny metal failing to build on a session high touched in the immediate wake of the sale.     

Gold was up 0.2 percent at $1,642.70 an ounce, while US gold futures for June delivery were up $4.90 an ounce at $1,644.50.     

 The Spanish Treasury on Thursday sold €2.54 billion ($3.33 billion) in bonds dated 2014 and 2022, which was more than expected, but its borrowing costs rose. The Treasury had been targeting a range of €1.5 billion to €2.5 billion for the auction. The yield on the 10-year auction rose to 5.74% from 5.403% at a prior auction of similar paper in January. For the auction of two-year paper, the yield rose to 3.46% from a prior 2.069% 

While the euro failed to build on its earlier session highs, it remained up 0.2 per cent against the dollar as markets digested the sale. European shares also stayed in the black, albeit off the highs of the day.       

Attention is now turning to America, to the Federal Reserve meeting next week, at which policymakers will discuss US monetary policy.  After a day of lackluster eco reports there is a growing chance that the Fed might intervene.    

Gold traders are awaiting fresh clues on whether a third round of quantitative easing, which would keep interest rates, and consequently the opportunity cost of holding bullion, at rock-bottom levels, is on the cards.      

Minutes from the Fed’s March meeting released this month showed support thinning for further bond purchases. Officials are unlikely to develop any more appetite for them by their meeting next week, despite disappointing March jobs figures.       

From a technical perspective, gold remains firmly in the $1,630-1,657 range it has held this week, lacking strong external drivers to break out.     

Physical buying interest from the world’s top two gold consumers, India and China, has been sluggish, even after a three-week strike by India’s jewelers came to an end.      

Among other precious metals, silver was up 0.2 per cent at $31.65 an ounce, while spot platinum was up 0.9 per cent at $1,586.74 an ounce and spot palladium was 1 per cent higher at $661.20 an ounce.   

Friday’s eco calendar is thin, so gold might hold in this range through the up coming weekend.

The gold:platinum ratio, which measures the number of gold ounces needed to buy an ounce of platinum, edged down to 1.04 on Thursday from the one-month high it hit earlier this week, as platinum clawed back some lost ground against the yellow metal.     

Platinum, which is heavily exposed to the European car market, has struggled to overcome soft demand in recent years.     

‘We still favour gold,’ Standard Bank said in a monthly report. ‘We see $1,630 and $1,600 as good levels to establish a long position for a move higher. Physical demand for gold in Asia is strong below $1,650.’ 

UBS and Bank of America have recently revised their 2012 gold forecasts downwards to the 1620.00 price level

 

Gold Fundamental Analysis April 20, 2012, Forecast

Analysis and Recommendations:

Gold is still searching for a direction. It is currently trading at 1649.75 up 10.15 but the shiny commodity has remained hugging the 1650.00 price level all week. Earlier in the day as traders speculated on the Spanish bond auction, gold moved as investors took preparatory positions, but this was a non event and gold moved back to where it was earlier in the days trading.

US eco numbers were disappointing today but not enough to push gold up the ladder.

The number of Americans who filed requests for jobless benefits totaled 386,000 last week, keeping claims at a four-month high, the U.S. Labor Department said Thursday. Claims from two weeks ago were revised up to 388,000 from an initial reading of 380,000. Economists had projected claims would drop to a seasonally adjusted 374,000 in the week ended April 14, so the number is likely to disappoint investors. The average of new claims over the past four weeks, meanwhile, rose by 5,500 to 374,750, the highest level since late January. Continuing claims increased by 26,000 to a seasonally adjusted 3.3 million in the week ended April 7, the Labor Department said. 

Sales of existing homes fell 2.6% in March, the second monthly drop though the sales pace in the first quarter was the best in five years, according to data released Thursday. The National Association of Realtors said.

 A gradual improvement in U.S. economic growth is expected past the summer, the Conference Board said Thursday as it reported that its index of leading economic indicators increased 0.3% in March, led by the interest rate spread.

Manufacturing activity in the Philadelphia region grew at a slower pace in April, the Philadelphia Federal Reserve reported Thursday. The bank’s business condition index fell to 8.5 from 12.5 in March.

Economic Data for April 19, 2012 actual v. forecast

 

JPY

 

 

 

Trade Balance 

-0.62T

 

-0.43T 

 

-0.32T 

 

 

 

AUD

 

 

 

NAB Quarterly Business Confidence 

-1.00

 

 

 

1.00 

 

 

 

EUR

 

 

 

Dutch Unemployment Rate 

5.90%

 

6.00% 

 

5.90% 

   

 

EUR

 

 

 

Italian Industrial New Orders (MoM) 

-2.5%

 

-1.1% 

 

-7.7% 

   

 

EUR

 

 

 

Spanish 2-Year Auction 

3.463%

 

 

 

2.069% 

 

 

 

EUR

 

 

 

Spanish 10-Year Auction 

5.743%

 

 

 

5.338% 

 

 

 

EUR

 

 

 

French 2-Year BTAN Auction 

0.850%

 

 

 

0.700% 

 

 

 

EUR

 

 

 

French 3-Year BTAN Auction 

1.060%

 

 

 

1.090% 

 

 

 

EUR

 

 

 

French 5-Year BTAN Auction 

1.830%

 

 

 

1.780% 

 

 

 

PLN

 

 

 

Polish Industrial Output (YoY) 

0.70%

 

4.70% 

 

4.60% 

 

 

 

PLN

 

 

 

Polish PPI (YoY) 

4.50%

 

4.80% 

 

6.30% 

 

 

 

CAD

 

 

 

BoC Gov Carney Speaks 

 

 

 

 

 

 

 

 

USD

 

 

 

Initial Jobless Claims 

386K

 

370K 

 

388K 

   

 

USD

 

 

 

Continuing Jobless Claims 

3297K

 

3280K 

 

3271K 

   

 

USD

 

 

 

Bloomberg Consumer Confidence 

-31.4

 

 

 

-32.8 

 

 

 

Economic Events scheduled for April 20, 2012 that affect the European and American Markets

06:00:00               EUR        Producer Price Index (MoM)                                                      0.40%    0.40%

The Producer Price Index released by the Statistisches Bundesamt Deutschland measures the average changes in prices in the German primary markets. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the EUR, whereas a low reading is seen as negative (or bearish).

06:00:00               EUR        Producer Price Index (YoY)                                                         3.10%    3.20%

The Producer Price Index released by the Statistisches Bundesamt Deutschland measures the average changes in prices in the German primary markets. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the EUR, whereas a low reading is seen as negative (or bearish).

 08:00:00              EUR        IFO – Expectations                                                                           102.5     102.7

The IFO Expectations released by the CESifo Group is closely watched as an early indicator of current conditions and business expectations for the next six months, where firms rate the future outlook as better, same, or worse. An optimistic view of those 7,000 business leaders and senior managers is considered as positive, or bullish for the EUR, whereas a pessimistic view is considered as negative, or bearish.

 08:00:00              EUR        IFO – Business Climate                                                                  109.5     109.8

This German business sentiment index released by the CESifo Group is closely watched as an early indicator of current conditions and business expectations in Germany. The Institute surveys more than 7,000 enterprises on their assessment of the business situation and their short-term planning. The positive economic growth anticipates bullish movements for the EUR, while a low reading is seen as negative (or bearish).

 08:00:00              EUR        IFO – Current Assessment                                                            117         117.4

The IFO Current Assessment released by the CESifo Group is closely watched as an indicator of current conditions and business expectations in Germany. The Institute surveys more than 7,000 enterprises on their assessment of the business situation and their short-term planning. The positive economic growth anticipates bullish movements for the EUR, while a low reading is seen as negative (or bearish).

 08:30:00              GBP       Retail Sales (YoY)                                                                            1.40%    1.00%

The retail Sales released by the National Statistics measures the total receipts of retail stores. Monthly percent changes reflect the rate of changes of such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. Generally speaking, a high reading is seen as positive, or bullish for the GBP, while a low reading is seen as negative or bearish.

 08:30:00              GBP       Retail Sales ex-Fuel (YoY)                                                           1.40%    1.00%

The Retail Sales ex-fuel released by the National Statistics is a measure of changes in sales of the British retail sector excluding fuel. It shows the performance of the retail sector in the short term. Percent changes reflect the rate of changes of such sales. The changes are widely followed as an indicator of consumer spending. A high reading is seen as positive (or bullish) for the Pound, while a low reading is seen as negative (or bearish).

13:00:00                               G20 Meeting                    

The G20 meeting is a gathering of finance ministers and central bank governors from systematically important industrialized and emerging economies to discuss key issues in the global economy. Traders should pay close attention to this event as it might bring a new dimension to the markets.

 

Spanish Auction the Non Event – Markets Do Not Respond

The markets had been holding on pins and needles waiting for the Spain bond auction today. And what happened. Much of nothing.

Spain’s Treasury sold EUR1.116 billion worth of two-year government bonds at an average yield of 3.463% earlier in the day, up sharply from 2.069% at a similar auction last month.

The country also sold EUR1.425 billion of ten-year debt at an average yield of 5.743%, up from 5.338% at a similar auction last month. It was the highest yield in five months.

Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.

There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears Spain will be the next in the euro zone to require a bailout. Following the bond auction, the euro trimmed gains against the U.S. dollar to trade largely unchanged

Asian markets are trading on a mixed note today as investors remain cautious before an important Spanish bond sale that would examine the market’s risk appetite as concerns with respect to Europe’s debt crisis increased.

Spain faces a major challenge with an auction of  2-year and 10-year bonds today which worth as much as 2.5 billion Euros. Spain’s yield of 10-year government bond rose above 6 percent in the initial part of this week which has increased concerns that the country may not be able to control its public financing and would go for a global bailout. This has led to rise in risk aversion in the global markets today. 

The US Dollar Index (DX) strengthened around 0.2 percent on Wednesday mainly on the back of rise in risk aversion in the global markets which increased demand for the low-yielding dollar. Rising worries over Euro Zone debt crisis led downside in the Euro which also acted as a supportive factor for the US dollar.  The index touched an intra-day high of 80.03 and closed its trading session at 79.67 yesterday.

Escalating tensions with respect to Euro Zone debt worries coupled with weak sentiments in the global markets led the Euro to trade lower on Wednesday.

Additionally, strength in the US dollar also acted as a negative factor for the Euro yesterday. The currency touched an intra-day low of 1.3056 and ended its trading session at 1.3118 on Wednesday.

Current account deficit in the Euro Zone stood at 1.3 billion Euros in February as compared to a surplus of 3.7 billion Euros in the previous month.

Gold futures fell for the third time in four sessions as the dollar’s advance curbed demand for the precious metal as an alternative asset.

The greenback climbed as much as 0.5 percent against a basket of major currencies, and the Standard & Poor’s GSCI Spot Index of 24 raw materials declined as much as 1.4 percent. Spain struggled to convince investors that the nation’s finances are under control, before another debt sale tomorrow.

Gold futures for June delivery slid 0.7 percent to settle at $1,639.60. The metal has  declined 1.9 percent this month. Jewelers in India, the world’s biggest importer, ended a 21-day strike on April 6 to protest a tax on nonbranded gold items. Sales in India “are nearly 80 percent lower on a daily basis than they used to be,” Jon Nadler, an analyst at Kitco Inc. in Montreal, said in an e-mail. Silver futures for May delivery retreated 0.6 percent to $31.487 an ounce, extending the monthly loss to 3.1 percent.

Futures were little changed after declining the most in two weeks yesterday. U.S. supplies gained 3.9 million barrels last week, Energy Department data showed. The median forecast in a Bloomberg News survey of analysts was for an increase of 1.8 million barrels. Prices also dropped after Iraq’s deputy prime minister for energy said the Strait of Hormuz is unlikely to close and there is no shortage of oil.

Crude for May delivery was at $102.58 a barrel, down 9 cents, in electronic trading on the New York Mercantile Exchange at 12:54 p.m. Singapore time. It slid 1.5 percent yesterday to $102.67, the lowest close since April 10. The more-actively traded June contract dropped 10 cents to $103.02 a barrel today. Front-month prices are 3.8 percent higher this  year.     

Brent  oil  for  June settlement rose 0.3 percent to $118.26 a barrel on the London-based ICE Futures Europe exchange.

The European benchmark contract’s premium to West Texas Intermediate was at $15.24, from $14.85 yesterday

Gold Forecast April 19, 2012, Technical Analysis

After forming a hammer the session before, the gold markets fell hard during the Wednesday session in order to retest the bottom of the Tuesday hammer for support. The area coincides with the $1,640 level – a level we keep seeing over and over. It has become apparent to us that this level is the site of a real battle.

The level has seen itself prove to be supportive several times lately, save the exception of one minor breakdown, but the price managed to pop back above it again and again. The reaction to this area suggests to us that it will turn into a major support area given a chance, and the fact that the overall trend is still indeed to the upside, we are even more interested in playing the market off of it.

Because of this, we are looking to buy the gold market on signs of support at the immediate area we find ourselves in. The shorter term charts can be used as a guide, with a special attention paid to certain candlestick formations such as hammers at this level. The first sign of that particular candlestick on an hour of four hour chart would have us long. Obviously, a daily hammer would be even more interesting, but the fact that the area has held up so well and the trend has been up for over a decade now has us willing to take a chance on it.

The upside will more than likely see a couple of major resistance areas that could work against the bulls from time to time. For example, the $1,700 level looks very resistive at this point, and will more than likely cause the market to pullback. However, we still believe in the gold markets over time and suspect that the area will eventually give way.

With central banks doing so much to ease and print money, and the threat of inflation as a result, gold should continue to do well over time. It is through this prism of thought that we simply cannot sell the market. 

Gold Forecast April 19, 2012, Technical Analysis
Gold Forecast April 19, 2012, Technical Analysis

Gold Fundamental Analysis April 19, 2012, Forecast

Analysis and Recommendations:

Gold is trading at 1643.05 down 8.05 towards the end of the day’s session. Continued worries over Spain and Italy have caused investors to move to the safety of the USD. Although gold seems to be hugging close to the 1650 price looking for direction.

Spot gold almost paused overnight and is currently hovering near the 1650 level. Spain sold 3.18 billion Euros ($4.2 billion) of debt yesterday, compared with the maximum target of 3 billion Euros. The IMF increased its estimate for global growth in 2012 to 3.5 percent from 3.3 percent and lifted its forecast for the U.S. expansion to 2.1 percent from 1.8 percent, easing concern that Europe’s debt crisis will stifle the recovery.

Economic Reports for April 18, 2012 actual v. forecast

 

AUD

 

 

 

MI Leading Index (MoM) 

0.2%

 

 

 

0.6% 

 

 

 

EUR

 

 

 

Current Account 

-1.3B

 

5.0B 

 

3.7B 

   

 

EUR

 

 

 

Spanish House Price Index (YoY) 

-7.20%

 

-5.90% 

 

-6.80% 

 

 

 

GBP

 

 

 

Average Earnings Index +Bonus 

1.1%

 

1.3% 

 

1.3% 

   

 

GBP

 

 

 

Claimant Count Change 

3.6K

 

7.0K 

 

4.5K 

   

 

GBP

 

 

 

MPC Meeting Minutes 

 

 

 

 

 

 

 

 

GBP

 

 

 

Unemployment Rate 

8.3%

 

8.4% 

 

8.4% 

 

 

 

CHF

 

 

 

ZEW Expectations 

2.1

 

-8.0 

 

0.0 

 

 

 

EUR

 

 

 

German 2-Year Schatz Auction 

0.140%

 

 

 

0.310% 

 

 

 

EUR

 

 

 

Spanish Trade Balance 

-3.75B

 

-3.90B 

 

-3.65B 

 

 

 

USD

 

 

 

MBA Mortgage Applications  

6.9%

 

 

 

-2.4% 

 

 

 

USD

 

 

 

Crude Oil Inventories 

3.856M

 

1.363M 

 

2.791M 

 

 

 

CAD

 

 

 

BoC Monetary Policy Report 

 

 

 

 

 

 

 

 

USD

 

 

 

Gasoline Inventories 

-3.671M

 

-0.931M 

 

-4.277M 

 

 

 

Economic Events scheduled for April 19, 2012 that affect the European and American Markets

14:00:00               EUR        Consumer Confidence                  -19          -20.3

The Consumer Confidence released by the European Commission is a leading index that measures the level of consumer confidence in economic activity. A high level of consumer confidence stimulates economic expansion while a low level drives to economic downturn. A high reading is seen as positive (or bullish) for the EUR, while a low reading is seen as negative (or bearish).

 14:00:00              USD       Existing Home Sales (MoM)       4.63M   4.59M

The Existing Home Sales, released by the National Association of Realtors provide an estimated value of housing market conditions. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD. Generally speaking, a high reading is positive for the Dollar, while a low reading is negative.

 14:00:00              USD       Philadelphia Fed Man                   12.2        12.5

The Philadelphia Fed Survey is a spread index of manufacturing conditions (movements of manufacturing) within the Federal Reserve Bank of Philadelphia. This survey, served as an indicator of manufacturing sector trends, is interrelated with the ISM manufacturing Index (Institute for Supply Management) and the index of industrial production. It is also used as a forecast of The ISM Index. Generally, an above-the-expectations reading is seen as positive for the USD.

Just a heads up since gold is volatile and will react to most economic indicators we will begin to post the daily calendar with events that could affect the price of gold. The gold price is sensitive to a number of scheduled U.S. and Euro area macroeconomic announcements—including retail sales, non-farm payrolls, and inflation. Gold’s high sensitivity to real interest rates and its unique role as a safe-haven and store of value typically leads to a counter-cyclical reaction to surprise news, in contrast to their commodities. It also shows a particularly high sensitivity to negative surprises that might lead financial investors to become more risk averse.  

These results have a number of implications. To reduce the uncertainty of the return on gold transactions, traders may wish to time their orders flow so as to avoid the release of information that has been shown to affect prices. For longer-term market participants, these results provide confirmation of the pro-cyclical bias of many commodities and gold’s role as a safe-haven during periods of economic uncertainty.

GOLD – SILVER – CRUDE OIL & NATURAL GAS UPDATE

Today base metals are trading slightly positive at LME and the Asian equities have also bounced back in green zone after retreating for the first two days of the week. Industrial production has remained weak in Japan while the property prices in China have also failed to appreciate and decreased in 46 cities out of the total 70 cities surveyed. Property sector has been a dragging factor for the economic growth in China and may continue to restrict upside for metals.

From the Euro-zone, the current economic scenario has improved slightly and the Spanish 10 year bond yield has declined by 0.18 percent and is presently at 5.8 percent after yesterday’s bond auction. Respite of Euro might still be under question, as Spain would go for 10 and 12 year’s debt sale tomorrow along with France and the long-term debts might not be on demand compared to the short term. From the economic data front, the Euro-zone current account is expected to remain weak after declining exports and imports. The trade balance has remained weak, with higher austerity and budget cut current account may not appreciate drastically, and may limit the Euro currency from much gains. From the US, the mortgage applications are expected to decline after stricter norms set forth by the top 5 mortgage providers in US.

Therefore, with stricter norms we may see the mortgage applications to decline compared to previous months. In today’s session base metals may post an early gain due to better equities and economic confidence, while the metals pack may continue to retreat as demand may further weaken after weak Chine property sector and negative economic releases from US and Europe.

Spot gold almost paused overnight and is currently hovering near the 1650 level. Spain sold 3.18 billion Euros ($4.2 billion) of debt yesterday, compared with the maximum target of 3 billion Euros. The IMF increased its estimate for global growth in 2012 to 3.5 percent from 3.3 percent and lifted its forecast for the U.S. expansion to 2.1 percent from 1.8 percent, easing concern that Europe’s debt crisis will stifle the recovery.

Silver traded higher by 0.7 percent on the international markets on Tuesday, on the back of weakness in the US dollar index coupled with upbeat sentiments in the markets. The white metal touched an intra-day high of $ 31.88/oz and closed at $31.68/oz yesterday

Currently, crude oil futures prices are trading above $104/bbl, with gain of more than 0.40 percent in Globex electronic platform. Higher draw down in petroleum stocks in addition to bounce back in equity market is supporting oil futures to trade on positive trend. As per American Petroleum Institute, crude oil inventory have increased by 3000K barrels, whereas petroleum stocks have declined by more than 2000K barrels each. Likewise, as per US energy department, crude oil stocks are also expected to climb up, whereas fall in gasoline and istillates stocks are expected to fall but in a slower pace than prior week. Thus, lower draw down of inventory level may create some pressure during US session.

The Euro-zone current account balance for the month of February is expected to come down , which may create pressure on Euro, which ultimately have negative impact on oil prices. On the other side, IMF have revised world economic growth outlook from 3.2 to 3.5 percent. Expectation of easing debt concern in Spain along with statement given by IMF may support Euro to be on higher side. So, overall, we may expect oil futures to trade in a positive direction during Asian and European session however may come under pressure during US session.

Natural gas futures prices fell by more than 3 percent both in NYMEX platform and MCX platform. Concern of lower demand due to mild weather condition, might have pressurized gas futures prices. In addition to it, higher level of production is having a bearish impact on gas prices. Today, we may expect gas prices to continue the bearish trend driven by the unchanged fundamentals of higher production level, ahead of US Energy department inventory tomorrow. 

Gold Forecast April 18, 2012, Technical Analysis

The gold markets fell for much of the session on Tuesday, only to turn back around on the bounce from the $1,650 level yet again. The market is still in an uptrend overall, and the hammer that the Tuesday session formed suggests that we are going to rise again. The breaking of the top of the Tuesday session would be our signal to go long, while we do not have a sell scenario at the moment. The trend has been far too strong over the last decade to flirt with selling at this point. 

Gold Forecast April 18, 2012, Technical Analysis
Gold Forecast April 18, 2012, Technical Analysis

Gold Fundamental Analysis April 18, 2012, Forecast

Analysis and Recommendations:

Gold has climbed today to 1653.45 moving up slightly by 3.45 as the USD dropped on negative home builder’s data and industrial production reports.

Industrial production was unchanged for the second month running in March, the Federal Reserve said Tuesday. Economists polled by MarketWatch had forecast a 0.3% gain. While utilities output gained 1.5%, manufacturing output slipped 0.2%

Although U.S. builders start work on new homes at a sharply slower March pace, construction permits jump to their highest level in 3 1/2 years, data showed. Builders began construction on new U.S. homes at a slower pace in March, but permits jumped to the highest level since September 2008, the Commerce Department reported Tuesday. Housing starts fell 5.8% last month to an annual rate of 654,000.

It closed at its lowest level in a week on Monday after investors sidestepped gold and instead sought out the U.S. dollar as a haven against euro-zone debt concerns.

Gold struggled for direction as investors weighed the news from Europe but sensed that concerns remained.

A successful bond auction in Spain and data showing German investor confidence rising for the fifth month in a row added to hopes the euro zone is on the mend.

Economic Reports April 17, 2012 actual v. forecast

Apr. 17

 

AUD

 

 

 

Monetary Policy Meeting Minutes 

 

 

 

 

 

 

 

 

 

JPY

 

 

 

Industrial Production (MoM) 

-1.6%

 

-1.2% 

 

-1.2% 

 

 

 

 

INR

 

 

 

Indian Interest Rate Decision 

8.00%

 

8.30% 

 

8.50% 

 

 

 

 

GBP

 

 

 

Core CPI (YoY) 

2.5%

 

2.4% 

 

2.4% 

 

 

 

 

GBP

 

 

 

CPI (YoY) 

3.5%

 

3.5% 

 

3.4% 

 

 

 

 

GBP

 

 

 

CPI (MoM) 

0.3%

 

0.3% 

 

0.6% 

 

 

 

 

EUR

 

 

 

CPI (YoY) 

2.7%

 

2.6% 

 

2.6% 

 

 

 

 

EUR

 

 

 

German ZEW Economic Sentiment 

23.4

 

20.0 

 

22.3 

 

 

 

 

EUR

 

 

 

ZEW Economic Sentiment 

13.1

 

10.7 

 

11.0 

 

 

 

 

EUR

 

 

 

Core CPI (YoY) 

1.6%

 

 

 

1.5% 

 

 

 

 

USD

 

 

 

Building Permits 

0.747M

 

0.710M 

 

0.715M 

 

 

 

 

USD

 

 

 

Housing Starts 

0.654M

 

0.705M 

 

0.694M 

   

 

 

CAD

 

 

 

Manufacturing Sales (MoM) 

-0.30%

 

-1.00% 

 

-1.30% 

   

 

 

EUR

 

 

 

ECB President Draghi Speaks 

 

 

 

 

 

 

 

 

 

CAD

 

 

 

Interest Rate Decision 

1.00%

 

1.00% 

 

1.00% 

 

 

Just a heads up since gold is volatile and will react to most economic indicators we will begin to post the daily calendar with events that could affect the price of gold. The gold price is sensitive to a number of scheduled U.S. and Euro area macroeconomic announcements—including retail sales, non-farm payrolls, and inflation. Gold’s high sensitivity to real interest rates and its unique role as a safe-haven and store of value typically leads to a counter-cyclical reaction to surprise news, in contrast to their commodities. It also shows a particularly high sensitivity to negative surprises that might lead financial investors to become more risk averse.  

These results have a number of implications. To reduce the uncertainty of the return on gold transactions, traders may wish to time their orders flow so as to avoid the release of information that has been shown to affect prices. For longer-term market participants, these results provide confirmation of the pro-cyclical bias of many commodities and gold’s role as a safe-haven during periods of economic uncertainty.