Gold Forecast – Gold Prices Breaking Out Above $1800 Confirming Next Up leg

Gold is above $1800 and confirmed last week’s outlook for a crucial 40-day cycle low. Prices remain on track for a retest of the $2000 level by July. The next 40-day low is not due until late June, so we see plenty of room for upside near-term.

GOLD FUTURES DAILY: The mid-term gold cycle bottomed on day 37, and prices are just 5-days into a new upswing. With futures clearly above $1800, the uptrends in metals in mines should begin to accelerate.

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Note- The 40-day cycle in gold bottomed on day 37 – slightly early but not surprising given the previous cycle extended to 41-days. On average, we see cyclical turning points about every 39-days.

GOLD MINERS (GDX): After an agonizing 7-month decline, gold miners formed a major bottom in March. In fact, we believe GDX may never return to the $30.00 level again for the remainder of this 10-year bull market.

Currently, miners are attacking the April high ($36.83) and the all-important 200-day MA ($36.99). Once prices push above $37.00, then I think there is a good chance shorts will begin to cover, and we could get the 5%+ bullish recognition day I’ve been expecting. Prices overwhelmingly confirmed last week’s 40-day cycle low, and we are only 4-days into a new upcycle.

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bullish recognition day is when the market suddenly acknowledges a trend change. Traders that were still looking lower get caught on the wrong side and frantically begin to cover. In GDX, this usually looks like a robust 5%+ up day on big volume.

We see tremendous value in high-quality gold producers. These miners are minting money (real money – not Dogecoin) and are incredibly undervalued, in our opinion. Our favorite producer currently is Kirkland Lake.

Silver and platinum are also primed and could explode higher over the coming weeks. Our Premium Metals Portfolio has been accumulating quality miners throughout the pullback and is well-positioned for this next advance.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.

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

Silver to $300

No, I haven’t lost my mind. After all, it’s a metal that’s known for massive rallies.

You see, when silver went trough its 1970s bull market, it started from a low of $1.31 in October 1971. By the time it reached its peak in 1980, silver had run all the way up to $49. That was a 37x return.

If we consider that silver was priced at $4.20 in late 2001, a 37x return would take it to about $155. However, I think this bull market could be an order of magnitude larger for a number of reasons, the main ones being debt, credit and money printing.

As a result, I think silver’s ultimate peak could be $300, and I won’t rule out possibly even higher.

Bullish Silver Fundamentals

Most developed and many developing nations have been in multi-year or even multi-decade deficit scenarios. This now looks to have become a permanent state, at least until we reach some sort of global financial reset.

The Institute of International Finance explains how the COVID-19 pandemic response added $24 trillion to the global debt mountain last year, to reach a new all-time record high of $281 trillion.

And interest rates being maintained at 5,000-year lows will only encourage more debt. Couple that with many countries borrowing to meet interest payments, and central banks soaking up much of that new sovereign debt, and inflation havens like precious metals gain strong appeal.

Silver in particular has the added benefit of 50% of its demand being industrial. With unprecedented economic stimulus programs, many favoring green energy, silver is uniquely positioned to profit. What’s more, according to Metals Focus, silver supply was down 4% in 2020 by 42M ozs. According to the Silver Institute, total supply will rise by 8% this year, though total demand will rise nearly twice as much, by 15%, led by industrial, jewelry and physical demand.

So the fundamental side of silver demand is looking strong, but the technical side is also very bullish.

Bullish Silver Technicals

Let’s consider the gold silver ratio.

As a quick refresher, the gold silver ratio is calculated by simply dividing the spot price for one gold ounce by the spot price of one silver ounce. That’s it. Naturally the higher the ratio, the more silver ounces are needed to buy one gold ounce, and vice versa. The most bullish scenario is when the ratio is falling from a high level, ideally from above 80, and the silver price is rising.

Here’s a chart of the gold silver ratio during the 1970s silver bull market.

To me it’s very intriguing to note how recessions, which are the grey vertical bars, tended to mark troughs and/or peaks in the ratio. What’s also interesting is that when silver reached its peak in 1980, the gold silver ratio ultimately bottomed around the same time at a level near 15, which was below the starting point near 20.

Let’s now move to the current silver bull market which I believe began in 2001. The following chart shows us silver prices since 2000, not adjusted for inflation.

Of course, silver had a tremendous run from $4.20 in 2001 to its 2011 peak at $49. It then corrected until late 2015, then moved sideways until bottoming near $12 last year in March. It had a tremendous move up to $30 within just 5 months and has been mostly consolidating since.

Now let’s examine the gold silver ratio action since 2001.

Again we see peaks and troughs tend to occur (though not exclusively) around recessions (grey bars). At silver’s peak in 2011, the ratio bottomed near 33. It then rose almost constantly up to its all-time peak last March at 125, then fell dramatically to its current level around 67, as silver started to significantly outpace gold. Consider that we know from history silver always outperforms gold in precious metals bull markets. So the current action is particularly exciting for silver.

Silver Targets

But what does it all mean for how high the silver price can go? Of course, no one knows for sure. But there are some indicators worth examining for clues and suggestions.

I believe the ratio will ultimately reach a low near 15. And given the inflationary path we’re on, I think gold could peak at $5,000 per ounce. That’s just 2.5 times last August’s peak near $2,000. In fact, I think there’s even a decent chance gold could reach $10,000, which is just 5 times last August’s peak. But if we stick with $5,000, and an ultimate bottom in the gold silver ratio of 15, we get ($5,000/15) $333 per ounce of silver.

Let’s look at silver price targets from another angle: inflation.

If we consider inflation-adjusted silver prices going back to 1970, we see that the peak reached in 1980 was actually $120/ounce in today’s dollars, and that’s using government sanctioned inflation statistics, which tend to be well below what we experience in everyday life.

Considering the old way of calculating inflation, which the U.S. abandoned decades ago and I reference below from Shadowstats.com, a realistic inflation rate would have averaged 7% – 8% since 1980 (triple official inflation), which would mean an equivalent silver price of $240-$360 dollars at the 1980 peak.

My gold silver ratio target for silver of $333 is comfortably within the range of $240-$360. If we take the mid-way point between $240 and $360, we get $300. I think that’s as good an estimate as any of where silver can peak in its current bull market.

On this basis, the silver price would need to be up by more than 10x from current levels to reach its ultimate high. Imagine for a moment, if silver were to soar tenfold from here, what the silver producers’ and silver explorers’ share prices would do. It’s not difficult to expect simply spectacular returns. Which is exactly why it’s so attractive to allocate to this space, while being diversified across several stocks, as it’s impossible to know which will do best. Still, odds are very good that if silver goes up by a factor of 10, the average silver stock should easily double that, and be up by a factor of 20, while the most successful juniors could gain 50x or more. That would simply be a repeat of previous bull markets.

Larger silver producers and royalty companies should be seen as core positions to be held for the long term. The more junior explorers should be treated more cautiously as speculations, on which to take profits when they materialize. Selling half of one’s position on a double would be especially sensible.

In any case, I believe it remains early days for silver and silver stocks. I expect to see much higher prices ahead in the metal and the equities. And in my view the current bout of weakness is an opportunity to buy or add to positions in this space. Remember, at $26 silver is still nearly 50% below its all-time nominal high, while gold is just 10% below its all-time nominal high. Silver is clearly the better relative bargain.

In the Silver Stock Investor newsletter, I provide my outlook on which silver stocks have the best prospects as this bull market progresses. Many offer 5x to 10x return potential in just the next few years, especially as silver heats up.

I think silver is currently at or very close to its bottom, but that its ultimate peak could well be in the $300 range.

Either way, silver is headed much, much higher.

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

Gold & Silver Begin New Advancing Cycle Phase

Before going into detail regarding my latest research and cycle phases, I want you to think of these cycle phases as Advancing and Declining cycle trends.  They act as a “build-up of trend”, then an “unwinding of trend”.  In each instance, trends can be either Bullish, Bearish, or Neutral in nature.  My research team and I believe a new Bullish Cycle Phase has begun in Gold and Silver.  If our research is correct, the next Advancing Cycle Phase may prompt a broad rally in Gold and Silver.

Understanding Cycle Phase Analysis & Trends in Metals

We interpret these cycle phases as unique trend segments involved in a broader cycle scope.  For example, over a longer-term rally, we may see many Bullish Advancing and Declining cycle phases take place – one after another.  Conversely, we may see many Bearish cycle phases take place in an extended downtrend.  Another type of cycle phase can also exist, the Reversal Cycle Phase – where price Advances in one direction and Declines in the opposite direction.  This type of Rotation Cycle Phase exists as the current completed Cycle on the Gold chart, below.

As we are nearing the end of the current Declining Cycle Phase as seen in the chart below, we will soon begin the new Advancing Cycle Phase in Gold.  Gold’s Reversal Cycle Phase that took place between December 21, 2020, and May 10, 2021, will likely close higher than the midpoint (or Apex) of the total Cycle Phase.  This suggests a new bullish price trend has taken over and the price is more likely to move higher in the next Advancing Cycle Phase. If this trend continues, then the price will continue to rally higher in the Declining Cycle Phase as well – as we saw in the first Cycle Phase: between March 16, 2020, and August 3, 2020.

Gold & Silver Phase Tables – Will Price Continue A New Bullish Cycle Phase?

To help explain our Cycle research, we’ve put together these tables to detail the Cycle Phases and price logic we use to interpret each Advancing and Declining phase.  Each table entry consists of an Advancing, then Declining Cycle Phase.  Combined, they make up a complete Cycle Phase.  We are measuring price at the midpoint (Apex) of the Cycle Phase to determine if any Advancing or Declining Cycle Phase is Bullish or Bearish in trend.  If both Advancing and Declining Cycle Phases show the same trend direction, we define that completed Cycle Phase as Bullish or Bearish.  If they differ in trend types, we define that completed Cycle Phase as a Reversal Phase.

Gold has been in a downtrend recently while Silver has continued to stay somewhat bullish in a sideways price trend.  You can see from the tables below, Gold recently completed a Reversal Cycle Phase (ending with a Bullish Declining Phase) while Silver has continued to exhibit Bullish Cycle Phases since March 9, 2020.

Both Gold and Silver ended their last completed Cycle Phases recently.  Gold will end the last completed Cycle Phase on May 10, 2021.  Silver ended its last completed Cycle Phase on April 12, 2021. The next Advancing Cycle Phase for both Gold and Silver will begin this week and next week – and will continue until July 19, 2021.  After that, the Declining Cycle Phase will begin and last until late September, for Gold, and late October for Silver.

If our research is correct, we may see extended bullish trending over the next 6+ months in both Gold and Silver.

Silver Cycle Phases Continue To Show Stronger Bullish Trending

The following Silver Weekly Chart highlights the Cycle Phases and highlights the price trends for each Advancing and Declining Cycle Phase.  While Gold has experienced an extended Bearish Cycle Phase over the past 5+ months, Silver has continued to show stronger bullish price Cycle Phases and continues to attempt higher closing price levels at the end of each Cycle Phase.  We believe this suggests Silver is likely to see some explosive upside price trending when the $28.42 level (the higher YELLOW line) is breached.  This level represents historical price resistance for Silver.  Once this level is breached, we believe Silver will begin to advance higher very quickly.

Remember, we have until July 19, 2021, before the first Advancing Cycle Phase in Silver ends.  This Advancing Phase may prompt a move above the $28.42 level and may attempt to rally above $30.00 as we have drawn on the chart (below). If the Declining Cycle Phase continues this bullish trend, we may see Silver trading above $32.00 ~ $33.00 before Halloween 2021.  This would represent a +26.5% rally in Silver from the last completed Cycle Phase price level.

In closing, we want to suggest that a rally as we are proposing in Gold and Silver will also present a renewed risk factor for the US and global markets (potentially). In the past, we have seen precious metals rally while the US stock market rallies.  It is not uncommon for precious metals to begin to move higher while the US stock market continues to move higher.  This type of price activity simply suggests that global traders/investors are moving capital into Precious Metals as the US stock market climbs a strengthening “wall of worry”.  This type of price action happened from 2004 to 2009 – prior to the Credit Crisis/Housing Crisis.

As we’ve been suggesting for many months, the next few years are going to be full of incredible opportunities for traders and investors. Smart traders will quickly identify these phases of the market and will understand how to position themselves to take advantage of this next phase. You can learn more about how I identify and trade Gold, Silver, and the markets by watching my FREE step-by-step guide to finding and trading the best sectors.

For those who believe in the power of trading on relative strength, market cycles, and momentum but don’t have the time to do the research every day then my BAN Trader Pro newsletter service does all the work for you with daily pre-market reports, proprietary research, and trade alerts. More frequent or experienced traders have been killing it trading options, ETFs, and stocks using my BAN Hotlist ranking the hottest ETFs, which is updated daily for my premium subscribers. Sign up today!

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

Happy Trading!

Chris Vermeulen
Founder & Chief Market Strategist
www.TheTechnicalTraders.com

Investors Awaiting US Jobs Report Before Making The Next Move

But the Dow Jones Industrial Average managed to advance to a new record high with the support of cyclical industries. European markets are also set for a subdued open following a mixed Asia session which saw Japanese stocks outperforming on their return from holiday, while shares in China and Australia dropped after Beijing announced a suspension of regular economic dialogue with Canberra.

US bond yields are back under pressure with 10-year yields falling for a fifth straight day, preventing the dollar from further rallies. Meanwhile in commodities, Brent is still attempting to break above $70 a barrel as crude stockpiles in the US fell more sharply than anticipated.

Key trends for equity investors haven’t changed a lot so far this year. Value and cyclical stocks remain the main beneficiaries from the reopening of economies, while growth and tech firms with overstretched valuations continue to suffer. In an expensive equity market and with anticipation of higher interest rates, value tends to benefit the most and investors are sticking to this narrative.

Surprisingly though, the bond market is still doing holding up despite all sorts of talk about an overheating economy and soaring inflation expectations. The 10-year breakeven inflation rate which measures expected inflation over the next 10 years reached 2.47% on Wednesday, the highest in eight years. Meanwhile five year breakeven rates approached 2.7%, the highest in a decade.

If Friday’s US jobs report comes out strong enough to force the Federal Reserve to announce tapering of asset purchases later this year, we could see the upward trajectory in long term bond yields resume after its latest pause. However, looking at recent economic data releases, it seems the economy is failing to surprise to the upside.

The employment component of the US PMI Manufacturing and Services indices both came in slightly above market expectations this week. Private payrolls rose by 742,000 jobs in April posting its biggest gain in seven months but still fell short of the 800,000 forecast. Today’s initial jobless claims will also provide more information about the recovery in the labour market. But it is Friday’s non-farm payrolls report that will determine how bond yields could move and possibly take the dollar in the same direction.

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American Indices Moving in Opposite Directions

American Indices are currently moving in opposite directions. The tech-heavy NASDAQ index is going down, aiming for the long-term up trendline while the old-school Dow Jones flirts with all-time highs after the price escaped from the pennant formation.

The German Dax is trading inside a flag formation, which is promoting a long-term breakout to the upside.

Gold is aiming higher after a successful bounce from the 1760 USD/oz support.

The USDCAD broke the lower line of the channel down formation, which should be considered an extreme weakness.

The AUDCHF tested the lower line of the symmetric triangle pattern. A breakout to the downside is very probable.

The ZARJPY shot higher after a false bearish breakout from the Head and Shoulders formation.

The EURPLN is aiming higher after a very handsome bullish engulfing pattern on the daily chart.

The USDHUF dropped like a rock after the price created a shooting star on the daily chart, which bounced from a combination of dynamic and horizontal resistances.

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

 

Lumber and Copper Are Surging. Will Gold Join the Party?

The rise in lumber prices can be seen in the chart below:

What a surge! It happened because of the limited supply and strong demand for new houses. But it’s not just lumber. Many raw commodities are rallying too. The price of copper, for example, has just approached its record height (from February 2011), as the recovery of the global economy boosted demand. Just take a look at the price below.

Indeed, the trend is up. Commodity prices are on the rise as a whole as the chart below clearly shows. Even Warren Buffet warned investors against a “red hot” recovery, saying that his portfolio companies were “seeing very substantial inflation” amid shortages of raw materials.

Of course, commodity price inflation and consumer price inflation are quite different phenomena, as consumers don’t buy lumber or copper directly but only finished products made from these materials. However, at least part of this producer price inflation may translate into higher consumer prices, as producers’ ability to pass higher costs on consumers has recently increased – people have a large holding of cash and are willing to spend it.

Implications for Gold

What do rallying commodity prices imply for the precious metals? Well, rising commodity prices signal higher inflation, which should increase the demand for gold as an inflation hedge . Of course, there might be some supply disruptions and bottlenecks in a few commodities. However, the widespread character and the extent of the increase in prices suggest that monetary policy is to blame here and that inflation won’t be just transitory as the Fed claims.

What’s more, the commodity boom is usually a good time for precious metals . As the chart below shows, there is a strong positive correlation between the broad commodity index and the precious metals index.

There was a big divergence during the pandemic when commodities plunged, while gold at the same time shined brightly as a safe-haven asset . So, the current lackluster performance of the yellow metal is perfectly understandable during the economic recovery.

Indeed, the rebound in gold has been weak, and gold hasn’t even crossed $1,800 yet, although it was close this week, as the chart below shows.

There was a rally on Monday (May 3) amid a retreat in the US dollar, but we were back in the doldrums on Tuesday, amid Yellen’s remarks about higher bond yields . She said that interest rates could rise to prevent the economy from overheating:

It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy

However, Yellen clarified her statements later, explaining that she was not recommending or predicting that the Fed should hike interest rates. Additionally, several FOMC members made their speeches, presenting the dovish view on the Fed’s monetary policy . For example, Richard Clarida, Fed Vice Chair, said that the economy was still a long way from the Fed’s goals and that the US central bank wasn’t thinking about reducing its quantitative easing program .

Anyway, the price of gold has been trading sideways recently as it couldn’t break out of the $1,700-$1,800 price range. This inability can be frustrating, but the inflationary pressure could help the yellow metal to free itself from the shackles. The bull market in gold started in 2019, well ahead of the commodities. Now, there is a correction , but gold may join the party later . It’s important to remember that reflation has two phases: the growth phase when raw materials outperform gold and the inflation phase when gold catches up with the commodities. So, we may have to wait for a breakout a little longer, but once we get it, new investors may flow into the market, strengthening the upward move.

If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. 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

 

EUR/USD Analysis Today Including Key Price and Chart Patterns

The EUR/USD is building a bullish bounce at the 38.2% Fibonacci retracement level, the 1.20 support zone, and the 144 and 233 ema area as expected in our EUR/USD video analysis.

This article will analyse the main targets for this bullish bounce. We will also take a look when to expect the next bearish price swing.

Price Charts and Technical Analysis

EUR/USD 6.5.2021 4 hour chart

The EUR/USD seems to have completed a bearish wave A (grey) at the support zone. This occurred after price action completed 5 waves up (grey) within wave A (pink):

  1. The wave A (grey) is probably part of a larger bearish ABC zigzag (grey).
  2. The ABC (grey) pattern is expected to complete a wave B (pink).
  3. The main target for the wave B (grey) is around the Wizz level 5 at 1.21. Here a bearish bounce is expected (orange arrows).
  4. The main target for the wave C (grey) of wave B (pink) is at the 61.8% Fibonacci retracement level near 1.1875 (blue box). Here a bullish bounce is expected (blue arrow).
  5. Both ABC zigzag patterns (grey and pink) are invalid if price action breaks the top too soon or the bottom.

On the 1 hour chart, we can see that the uptrend finished at the end of last week when price action broke below the 144 ema. Prior to the break, the 144 ema acted as a strong support zone. With the bearish breakout, a bearish retracement sent price action lower.

EUR/USD 1 hour chart 6.5.2021

On the next 1 hour chart, we focus on the recent price swing and Elliott Wave patterns:

  1. A bearish 5 wave (blue) has been completed in the 5 wave pattern (orange).
  2. A falling wedge reversal chart pattern confirmed the end of the bearish price swing.
  3. Also the divergence pattern (purple) indicated exhaustion for the bears.
  4. A bullish breakout above the resistance trend line (dotted orange) and the 21 ema zone confirmed a bullish price swing.
  5. Now the main target seems to be the 144 ema resistance If a bull flag chart pattern emerges, then a new higher high could complete a 5 wave up (blue) within wave A (orange).
  6. A bearish ABC could send price back down again to the support zone (blue box).
  7. An inverted head and shoulders pattern could end the wave B (orange) and start the wave C (orange).
  8. A break below the Wizz 5 level invalidates (red circle) the currently expected bullish ABC pattern.

EUR/USD 6.5.2021 1 hour chart

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter

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

Moneta Markets Launch Revamped Affiliate Partner Program!

As Moneta Markets continue to disrupt the FX and CFD industry, the revamped Partnership model rewards Affiliates with up to $1200 for deposits of $1000 or more. With three CPA plans to choose from, as well as an exclusive ‘Platinum’ model for their premium affiliate partners, Moneta Markets’ new program looks to set to change the landscape of the Forex affiliate industry.

When asked about the revamped CPA structure, Moneta Markets’ founder David Bily said that to stand out in an already crowded industry, you need to constantly evolve and innovate based on observations and of course, ongoing feedback from clients and partners alike.

Moneta Markets’ founder David Bily

“We created our new CPA model with two simple goals, to have tailored plans that better suit the type of traffic that partners choose to target, and to reward our most successful affiliates. By offering three CPA plans, Gold, Silver and Bronze, we can cater to affiliates of all types. No other broker in the industry offers this level of flexibility. And, with up to $1200 CPA on offer for deposits of $1000 or more, that makes us one of the highest paying forex brokers for affiliates.

“On top of the multiple payment structures, we have also created a new “Platinum” plan for affiliates who are bringing in high-quality traffic on a consistent basis that will reward them even more. On top of their CPA payments, Platinum partners will receive ongoing rebates on Forex in perpetuity, bi-weekly payouts, prepayments as well as a range of other exclusive benefits. We value the work of our partners, and it is important that we continue to build on these relationships and reward our affiliates accordingly.

“Our software providers and technology partners have also had a vital role in helping us to create a fully integrated system that streamlines each individual component of our Affiliate Partner program. By working closely with the team at Panda and Praxis, we have been able to create a system that allows fast client onboarding and account funding. And, by integrating the CellXpert platform with the Moneta Markets Client Portal and WebTrader platform, affiliates can access transparent reporting of payouts and rebates, powerful tracking, optimization and a comprehensive range of multilingual marketing materials that are optimised to convert, and to help partners reach traffic on a global scale. And, in an environment where we are seeing significantly more mobile traffic, we have integrated AppsFlyer into our AppTrader mobile platform for increased lead attribution, offering affiliates additional avenues to improve their earnings.”

In addition to the launch of their Affiliate program, Moneta Markets has also significantly reduced spreads across all instruments, a feature that affiliates are now leveraging when marketing the brand.

“We want to make it so that our partners can promote a superior product to our competitors, and with that in mind we are constantly looking to improve our offering. Recently, we have introduced new account types STP, True ECN and Moneta Prime, all of which offer some of the lowest spreads in the industry across not only Forex pairs, but all our Indices and Commodity products. Many brokers claim to have low spreads, but very few can live up to that promise. I can say with confidence that Moneta Markets’ spreads are much lower than our direct competitors, with the majors currency pairs and Indices averaging 0.0 pips.”

With the addition of multiple account types as well as offering multiple trading platforms to choose from, MetaTrader 4, MetaTrader 5, and their next-gen WebTrader platform, Moneta Markets continues to appeal to an expanding audience, living up to its reputation as not only the preferred partner for Affiliates, but as the broker to keep an eye on throughout 2021! To find out more about the broker’s first of its kind CPA Affiliate program, click here.

Strong Earnings Pull FTSE 100 Higher Ahead of BoE Meet, Election Day

The blue-chip index rose 0.3%, with fashion retailer Next gaining 2.1% after it raised its profit outlook for the 2021-22 year for the second time in two months.

Engineer Melrose gained 1.2% after it said it was performing “modestly” ahead of expectations, with operating margins in the first quarter improving faster than expected.

The domestically focused mid-cap FTSE 250 index advanced 0.2%.

The BoE is expected to raise 2021 GDP forecast sharply from its previous estimate of 5% growth at 1100 GMT, and it might start to slow its pandemic emergency support.

Voters in England, Scotland and Wales head to the polls on Thursday in a series of different elections, with a vote for the Scottish parliament and one for a seat in Westminster in focus for clues to Britain’s future political landscape.

(Reporting by Devik Jain in Bengaluru; editing by Uttaresh.V)

Gold Bugs Close in on $1,800 Mark, but Face Uphill Task Ahead

At the time of drafting this report, gold bugs seem to be fairly in control with gold futures nearing $1,800 per ounce despite recent data revealing the greenback’s value is gaining strength day by day.

Gold bulls are riding the bandwagon high on reports new cases of COVID-19 infection has broken above 400,000 in the world’s second most populated country (India), arbitrarily gave gold bugs the firepower to challenge the $1,800 price levels.

The yellow metal earlier reverses the pullback from its intraday high while picking up bids at $1,794 per ounce, up 0.58% for the day, as the precious metal rises for the second consecutive day with US Treasury yields and the greenback weak responses to the latest challenges in growing risk sentiments across the market spectrum.

At press time, the global crypto market value stood at $2.35 trillion, posting a 5.16% increase over the last day with Ethereum and most altcoins trading close to record high, which wasn’t enough to deter growing demand for gold.

However, gold bulls face an uphill task, with recent reports revealing the world’s most powerful economy was on the path to full recovery with the U.S. ADP Nonfarm Employment Change rising to 742,000 in April.

Such growth was the biggest in seven months as American businesses increased their production capacity in response to high economic demand in play boost by stimulus support, suggest gold bugs might unlikely have enough gas to stay afloat in the coming weeks.

In spite of the soaring dollar and the appetite for more risk, gold bugs are hopeful to attack the $1,800 threshold one more time.

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

AB InBev CEO Brito to Step Down, North America Chief to Step in

By Philip Blenkinsop

The brewer of Budweiser, Corona and Stella Artois lagers said its board had unanimously elected Doukeris, the former head of sales, to succeed fellow Brazilian Brito, the architect of AB InBev’s global expansion, from July 1.

Chairman Martin Barrington said in a statement that Doukeris’ expertise in brands, consumers and innovation meant he was ideally suited for the company’s next phase.

That phase could be more focused on boosting sales of over 500 brands than on acquisitions in an already concentrated brewing market.

Brito arrived when the brewer was called InBev, the result of a 2004 merger between Belgium’s Interbrew and Brazil’s AmBev, which he headed.

During his tenure, the company took over Anheuser-Busch in 2008, added Mexico’s Grupo Modelo and in 2016 spent over $100 billion on SABMiller, then the world’s second largest brewer.

The acquisition brought more Latin American markets and saw it enter Africa for the first time.

However, the purchase also saw AB InBev‘s net debt jump to $82.7 billion as of the end of 2020, some 4.8 times EBITDA and well above an “optimal” level of two.

Its share are now less than half their late 2015 peak, with craft beer eating into its U.S. sales and difficulties in Brazil and South Africa.

STRONG REBOUND AT START OF 2021

The company separately reported first-quarter earnings ahead of expectations, even with lockdowns closing hospitality in much of Europe and a one-month alcohol sales ban in South Africa.

Sales of beer surged 64% in Asia-Pacific, a year on from the initial coronavirus lockdown in China, a major AB InBev market.

They rose by more than 10% in Latin America, outperforming industry growth in two of its top markets, Brazil and Mexico. In Europe, sales of its own beers were flat.

Core profit (EBITDA) rose 14.2% on a like-for-like basis and removing the impact of currency translation to $4.27 billion, beating the 6.6% average forecast in a company-compiled poll.

This figure should increase by between 8% and 12% in 2021, with revenue growth greater than that, based on higher beer sales, price hikes and a shift in consumer taste to premium brands, AB InBev said.

(Reporting by Philip Blenkinsop; Editing by Sherry Jacob-Phillips and Jason Neely)

EURUSD Forms Death Cross

EURUSD has formed what’s known as a “death cross”, whereby its 50-day simple moving average has crossed below its 200-day counterpart.

“Such a technical event typically heralds further declines.”

The currency pair is now testing the psychological 1.20 mark as a support level, failing which then the early-February low of around 1.1955 could be the next area of interest for bears.

May is typically a bad month for the euro. Over the past 10 years, the euro has averaged a 1.63% monthly decline versus the US dollar in May alone.

And in living up to such a track record, indeed the euro’s fortunes have been already dismal so far this month, with the shared currency weakening against most of its G10 peers so far this week.

Fundamentally-driven traders and investors will be eyeing these economic data releases due before the weekend:

  • Thursday, 6 May – Eurozone March retail sales data, Germany’s March factory orders
  • Friday, 7 May – Germany’s industrial production and external trade

“Still, better-than-expected readings of the Eurozone economy may only have a limited impact on the euro’s performance.”

Despite the rosier economic outlook for the EU, the US dollars appears to have a bigger say on EURUSD, with the greenback supported by stabilising US Treasury yields.

As for ECB President Christine Lagarde, who’s due to make a speech later today, she and her colleagues at the European Central Bank may not mind this softer euro. After all, a weaker currency would help buffer its economic recovery. A weaker currency can make Europe’s exports become more competitive on the global stage, while staving off inflationary pressures.

EURGBP climb loses steam

As for EURGBP, the currency pair’s attempts to break out of its downtrend has been capped by the 0.872 region, with the currency pair now finding support around its 50-SMA for the time being.

The Bank of England’s decision today is also in keen focus, although the central bank is unlikely to adjust its policy setting. Yet, the forward-looking investor will be monitoring the BOE’s economic outlook, considering the stellar progress the UK has enjoyed with its vaccination programme. The inoculation campaign’s early successes have already prompted UK Prime Minister Boris Johnson to expect the end of social-distancing measures by June 21. Such a move would be a massive boost to economic activity in the UK.

Such optimism may also encourage a hawkish tone out of BOE officials who may hint at an eventual paring back of its bond purchases today.

“Such hints may spur further gains in the Pound, potentially pushing EURGBP below its 50-SMA and on a path towards its mid-March lows of around 0.85377.”

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Superdry Sees ‘Light at End of Tunnel’ as Returns to Growth in Q4

“The early signs following the reopening of our UK stores are encouraging, as lockdown restrictions start to lift, and we can clearly see the light at the end of the tunnel,” Chief Executive Julian Dunkerton said in a trading update for the year to April 24.

Shares in the company, which fell to a low of 60 pence at the start of the pandemic in March 2020, were trading up 6% at 293 pence in early deals.

The company, best known for its sweatshirts, hoodies and jackets, has been hammered by the pandemic.

It slumped to an underlying pretax loss of 10.6 million pounds ($14.4 million) in the six months to Oct. 24, and it suffered a further blow when stores were forced to close in the important Christmas period.

However it said on Thursday trade in stores that had reopened was “encouraging”. Non-essential shops reopened in England on April 12.

But trading in the European Union remained suppressed due to continuing restrictions, it said.

Group revenue in its fourth quarter increased by 0.8% to 118.3 million pounds, it said, with a 26.6% rise in online and a 13.5% rise in wholesale offsetting a 51.5% drop in store sales.

($1 = 0.7191 pounds)

(Reporting by Paul Sandle; Editing by Alistair Smout)

EasyJet CEO Warns Britain Could be Left Behind on Travel

Britain will on Friday announce its “green list” of low risk places where people can travel without needing to quarantine on their return home, but reports suggest that just a handful of countries will make the list, with major destinations like Spain and Greece excluded.

“It’s going to you know be very odd and ironic that actually the UK, the most advanced when it comes to the roll out of the vaccination programme, is actually going to find themselves left behind,” easyJet Chief Executive Johan Lundgren told the FT Live online conference on Thursday.

“I think this is going to need to change, it’s going to need to change very rapidly.”

(Reporting by Sarah Young, Editing by Paul Sandle)

Oil Prices Rise on Drawdown in U.S. Crude Inventory

By Jessica Jaganathan

Brent crude oil futures rose by 17 cents, or 0.3%, to $69.13 a barrel by 0643 GMT, and U.S. West Texas Intermediate (WTI) crude futures gained by 9 cents, or 0.1%, to $65.72 a barrel.

Both benchmarks hit their highest since mid-March on Wednesday, before retreating to end little changed following two days of gains.

Easing coronavirus restrictions in Europe have led to a pick-up in fuel demand, analysts from Citi said in a note.

“As the roll-out of vaccines continues and a pent-up summer driving season continues to manifest, this trend should accelerate, keeping demand for motor fuels robust and boosting market confidence in the recovery story,” they said.

U.S. crude stocks fell more than expected last week as refining output rose and exports surged, the Energy Information Administration said on Wednesday. [S/EIA]

Crude inventories fell by 8 million barrels in the week to April 30 to 485.1 million barrels, compared with expectations in a Reuters poll for a 2.3 million-barrel drop.

U.S. gasoline stocks rose by 737,000 barrels in the week, the EIA said, against a forecast for a 652,000-barrel draw.

“We think U.S. demand is strong,” said analysts from Commonwealth Bank of Australia. “The U.S. refinery utilisation rate is now above the five-year average.”

U.S. jet fuel demand is expected to surge by 30% in the second quarter compared with the first quarter on increased domestic travel, they added.

Pandemic-related restrictions in the United States and parts of Europe are easing, but infections are still on the rise in major crude oil importers India and Japan, capping price gains.

Meanwhile, militants using bombs attacked two oil wells at an oilfield close to the northern Iraqi city of Kirkuk on Wednesday, killing at least one policeman and setting off fires, the country’s oil ministry said.

Industry sources said the attack had not affected output. An oil ministry statement did not comment on production.

(Reporting by Jessica Jaganathan; Editing by Tom Hogue and Richard Pullin)

Tesla Developing Platform to Allow Car Owners in China Data Access

Tesla, which makes Model 3 sedans and Model Y sport-utility vehicles at its Shanghai factory, aims to launch the data platform this year, it said in a statement.

This is the first time an automaker has announced plans to allow customers access car data in China, the world’s biggest car market.

Automakers for the past several years have been equipping more vehicles with cameras and sensors to capture images of a car’s surroundings. Control of use, sending and storage of these images is a fast-emerging challenge for the industry and regulators worldwide.

China last month published draft rules to ensure the security of data generated by smart cars. Data collected from Tesla electric cars in China is stored in the country, a company executive said last month.

Tesla in April was targeted by state media and regulators after a customer, angry over the handling of her complaint about malfunctioning brakes, climbed on top of a Tesla car in protest at the Shanghai auto show. Videos of the incident went viral.

Tesla provided the data related to the brake incident to the customer complying with the local authorities’ order.

(Reporting by Yilei Sun and Tony Munroe; Editing by Christian Schmollinger, Rashmi Aich and Vinay Dwivedi)

EUR/JPY Structural Breakout Will Determing the Next TP

The EUR/JPY has formed a structure which look like a bullish wedge, but we need to pay attention to the direction of the breakout.

131.35 breakout should be targeting 131.65 as the first target. Further continuation up, with a positive momentum should target 132.02-132.20 zone. However if something happens and the bullish wedge fails to provide the breakout to the upside watch 130.87 level. Below, a bearish breakout will happen towards the 130.63 and 130.50 zone.

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

Cheers and safe trading,

Nenad

 

Exclusive: China’s Tencent in Talks with U.S. to Keep Gaming Investments

By Echo Wang and Greg Roumeliotis

Tencent has been in talks with the Committee on Foreign Investment in the United States (CFIUS), which has the authority to order the Chinese technology giant to divest U.S. holdings, since the second half of last year, the sources said.

CFIUS has been looking in to whether Epic Games’ and Riot Games’ handling of the personal data of their users constitutes a national security risk because of their Chinese ownership, the sources added.

Tencent owns a 40% stake in Epic Games, the maker of popular video game Fortnite. Tencent also bought a majority stake in Riot Games in 2011 and acquired the rest of the company in 2015. Riot Games is the developer of “League of Legends,” one of the world’s most popular desktop-based games.

Tencent is negotiating risk-mitigation measures with CFIUS so it can keep its investments, according to the sources. The details of the proposed measures could not be learned. They typically involve ringfencing the owner of a company from operations that have national security implications. They often call for the appointment of independent auditors to monitor the implementation of these agreements.

One of the sources said Epic Games has not been sharing any user data with Tencent.

The sources cautioned there is no certainty that Tencent will clinch deals to keep its investments and asked not to be identified because the matter is confidential.

Tencent, Epic Games and a CFIUS representative at the U.S. Treasury Department declined to comment.

A Riot Games spokesman said the Los Angeles-based company operates independently of Tencent and that it has implemented “industry-leading practices” to protect player data. He declined to comment on Riot Games’ discussions with CFIUS.

CFIUS has been cracking down on Chinese ownership of U.S. technology assets in the last few years, amid an escalation in tensions between Washington and Beijing over trade, human rights and the protection of intellectual property. U.S. officials have expressed concerns that the personal data of U.S. citizens could end up in the hands of China’s Communist Party government.

President Joe Biden’s administration has maintained the hawkish stance against China inherited in January from his predecessor Donald Trump, albeit with more of a focus on geopolitical issues such as the future of Taiwan and Hong Kong, as well as China’s persecution of the Uyghurs in Xinjiang.

Yet many key CFIUS roles have not yet been staffed. This has provided a reprieve to China’s ByteDance, which was ordered by Trump last year to sell its popular short video app TikTok but balked at a transaction that would have involved Oracle Corp and Walmart Inc. CFIUS has not sought to enforce the divestiture order under Biden.

Epic is locked in a legal fight with Apple Inc over access to the iPhone maker’s app store. It alleges that Apple forces developers to use its in-app payment systems – which charge commissions of up to 30% – and to submit to app-review guidelines that discriminate against products that compete with Apple’s own.

Apple argues that Epic Games broke their contract when it introduced its own in-app payment system in Fortnite to circumvent Apple’s commissions. It says the way it runs the app store inspires trust in consumers to open up their wallets to unknown developers.

Tencent’s vast businesses include video games, content streaming, social media, advertising and cloud services. China has in recent months sought to curb the economic and social power of Tencent and other internet companies such as Alibaba Group Holding Ltd, in a clampdown backed by President Xi Jinping. Reuters reported last week that Beijing was preparing a substantial antitrust fine for Tencent.

(Reporting by Echo Wang in Miami and Greg Roumeliotis in New York; Editing by Matthew Lewis)

Aston Martin Posts Smaller Loss as Sales More than Double

That compared with the 110.1 million pound loss the luxury brand posted in the same period last year, when it brought in fresh investment from billionaire Executive Chairman Lawrence Stroll to shore up its finances.

The carmaker of choice for fictional secret agent James Bond has had a tough time since floating in 2018, as it failed to meet expectations and burnt through cash.

The arrival of its first sport utility vehicle, the DBX, which fist rolled off the production line in July 2020, has helped boost the company as it widens its appeal in a lucrative segment of the market.

In the first quarter of 2021, total sales to dealers more than doubled to 1,353 vehicles and the firm said it was maintaining its full-year guidance that volumes will stand at around 6,000 vehicles.

It hopes to reach around 10,000 cars and revenue of roughly 2 billion pounds by 2024/25.

“I am pleased with our performance in the first three months of the year, delivering results in-line with our expectations of good growth and progress on the path to improved profitability and cash generation,” said CEO Tobias Moers.

“We are encouraged by the growth in orders for both GT/Sport and DBX, providing good visibility.”

($1 = 0.7191 pounds)

(Reporting by Costas Pitas; Editing by Alistair Smout and Sarah Young)

Rebound in Trading Boosts Earnings at France’s SocGen

France’s third-largest listed bank, which tumbled in 2020 to its first full-year loss for a decade as the COVID-19 pandemic rattled its businesses, posted a 814 million euros ($977.37 million) net profit in the quarter against a 326 million euros loss a year ago.

Earnings per share amounted to 0.79 euro, above a mean forecast for 0.23 euro according to Refinitiv data.

Under market pressure to boost profitability, SocGen chief executive Frederic Oudea has speeded up an overhaul of business since 2018 to reinforce the bank’s balance sheet by selling units in Eastern and Central European countries such as Poland, Serbia and Bulgaria.

SocGen also exited or cut back some corporate and investment banking (CIB) activities, such as commodities trading. The bank is due to unveil a review of its CIB on May 10.

SocGen benefited from a sector-wide boom in share trading, with first quarter revenues jumping to 851 million euros against just 9 million euros last year when the bank was hit by losses from complext derivative products, and had said it would exit some business lines.

“The equity businesses enjoyed their best quarter since 2015,” SocGen said in a statement.

Revenue was up by 2.63% in fixed income and currency trading, outperforming some European rivals such as BNP Paribas and Barclays but still lagging U.S. investment banks.

The positive tone was echoed at other European banks, with ING and UniCredit also reporting better-than-expected earnings on Thursday.

However, European lenders are still grappling with thin margins and home markets still dealing with COVID-19 restrictions, with the resilience of their recovery likely to be tested if financial market volumes become more subdued.

In its French retail business, SocGen posted a 1.8% drop in revenue but said activity was gradually improving.

“The strong recovery in equities and the resilient top line performance in French retail is reassuring and consensus has to upgrade estimates given the turnaround in global markets and lower cost of risk guidance”, analysts at JPMorgan noted.

SocGen also confirmed pandemic-related provisions would fall this year from 2020 levels. The bank now sees its cost of risk, which reflects provisions against bad loans, to be between 30 and 35 basis points in 2021 against 64 basis points last year.

Shares in SocGen have gained 38.5% since the beginning of the year after a 45% slump in 2020. Its share price has more than doubled since its lowest at 10.77 euros on Sept. 30.

As part of further initiatives to enhance returns, SocGen entered last month in exclusive talks to sell most of its asset management arm Lyxor to Amundi for 825 million euros.

The lender said last year it would merge its two retail banking networks in France, with the closure of 600 of its nearly 2,100 branches by 2025.

(Reporting by Matthieu Protard and Marc Angrand, Editing by Sarah White and Carmel Crimmins)