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Gold Trading Week Ahead 20th April 2015

 

Gold Trading Week Ahead – 20 April 2015

Gold treaded water last week with gold finishing the week almost identical to where it closed the previous week. Last week was all about CPI data while this week we have a number of economic, political and cultural factors that will drive sentiment.

European indices have seen sentiment begin to turn after the initial enthusiasm for Mario Dragi’s QE. Greece is also back in the spotlight, the Eurozone has a crucial meeting later this week regarding Greece. A Greek default is certainly figuring in traders’ minds, with this increased concerns I expect demand for gold to increase.

Demand from both India and China has been weak in recent trading sessions, not entirely surprising given the recent strength of the U.S. dollar and the fact that many Indian buyers have been awaiting Akshaya Tritiya which is Tuesday 21st April. I expect Indian demand will increase this week as Akshaya Tritiya is considered auspicious for starting new businesses, investments and the like.

This week is packed with economic data that could set the direction for precious metals.

Monday the Chicago Federal Reserve National Activity Index data for March is released.

Tuesday sees the Reserve Bank of Australia (RBA) meeting minutes released, if the RBA signals that is moving closer to a rate cut then we may see gold in AUD edge higher.

Wednesday will see the release of the Bank of England (BoE) minutes, Australian CPI, US Existing Home Sales and Crude Oil Inventories.

Thursday is full of economic data with Manufacturing PMI data out for Japan and China, UK Retail Sales, US New Home Sales and importantly US Jobless Claims. Westpac is forecasting a drop in Jobless Claims to 286,000, down from 294,000 as at the last reading.

Friday the Eurozone will meet to discuss Greece and its further reforms that it needs to provide by Friday. The odds of a Greek default are certainly shortening with Friday being the next critical hurdle for Greece and the Eurozone. US Durable Goods Order data is also out later on Friday, the market is expecting a rise of 0.6%.

This week also sees the release of a number of key US company announcements which will give investors a better understanding of the strength of these key companies. The companies with announcements include Wal-Mart, Yahoo, IBM, Morgan Stanley, AT&T, Boeing, Coca-Cola, Facebook, Microsoft, 3M, Procter & Gamble, Costco and Starbucks.

It could be a volatile week across all markets this week, with gold set to benefit, I expect to see gold test the US$1,220/oz resistance level, a level gold needs to consolidate above this level before moving higher.

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Courtesy of:  www.bullionindex.com.au

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Gold Trading Week Ahead

 

Bullion Index report: Late last week gold managed to stem the recent losses as the dollar rally paused. An 8 day run of consecutive losses on gold came to an end on Thursday, not before posting a new 4 month low.

Last week we saw solid buying from our clients at the low US$1,150’s/oz levels.

This week is going to be a key week for gold with the Federal Reserve’s two day policy meeting Tuesday and Wednesday. The main focus will be Fed Chair Janet Yellen’s press conference following the FOMC announcement at 2pm Wednesday New York time. The price of gold is being driven almost solely by US dollar movements at the moment (dollar up, gold down or dollar down, gold up), so if any wording coming out of the Fed next week hints at a June rate rise, look to see further US dollar strength and gold soften. If the Fed notes that it still remains ‘patient’, the market is going to take that as a post June rate rise which should give gold a boost. Gold investors should also look out for any commentary from Yellen surrounding the US dollar. Traditionally the Fed would not mention the US dollar however given its stunning run it may play a factor in the Fed’s monetary policy. If it does come into play then the Fed may look to hold off tightening until later on in the year or even possibly next year.

The Fed is facing one of its biggest decisions since the GFC, they do not want to go too early or too late when it comes to raising interest rates.

The other events of the week that gold traders should be aware of include; ECB President Mario Draghi’s speech on Monday, US Building Permits and Housing Starts on Tuesday, Swiss National Bank Monetary Policy Decision and Philadelphia Fed Manufacturing Index both on Thursday.

I do not expect to see any further big moves on gold until after Yellen’s press conference on Wednesday. Between the open on Monday and her press conference I expect to see investors adding to long gold trades on any dips.

Investors have been showing more interest in platinum in the past week as they look for value, platinum has recently hit lows not seen since mid-2009.

Gold closed at US$1,158.60oz in New York on Friday, down US$10oz on the week.

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Courtesy of:  www.bullionindex.com.au

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SwissQuote buy USD/CAD recommendation

 

SwissQuote report to clients that the “USD/CAD has seen a pickup in buying interest near the key support area between 1.2352 and 1.2314. However, the succession of lower highs remains thus far intact. Hourly resistances can
now be found at 1.2566 (02/03/2015 high) and 1.2664. An hourly support lies at 1.2449 (27/02/2015 low).

In the longer term, the technical structure looks like a rounding bottom whose maximum upside potential is given by the strong resistance at 1.3065 (09/03/2009 high). The recent weakness is seen as a medium-term corrective phase. Key supports stand at 1.2314 (22/01/2015 low) and 1.2047 (intraday low)”.

Buy limit 2 units at 1.2363, Obj: Close unit 1 at 1.2646, remaining at 1.2950, Stop: 1.2290

Source: SwissQuote

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US dollar far from overvalued – SwissQuote

 

SwissQuote report that “although the recent rise in the value of the greenback has been impressive, valuation are far from overvalued. Indeed, looking at some fundamental measures like PPP, long-term valuations do not suggest any
significant exaggeration in the value of the US dollar. However, given that the ECB’s QE and part of the Greek uncertainties are behind us, most of these Euro negative factors are now discounted. As a remaining big driver
for Euro weakness is the timing of the Fed’s tightening cycle, which remains very uncertain, the appreciation of the US dollar is likely to slow in the near-term. However, if our June scenario is correct and given the more dovish stance from the markets, we continue to favour a mediumterm bullish view on the US dollar index. Any decline near 91.0 should be seen as a very attractive entry point”.

(Source: SwissQuote)

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USDJPY further gains expected

 

SwissQuote favour further gains for USDJPY. They report “Japanese inflation expectations are declining Hawkish expectations on US monetary policy have recently done the heavy lifting in USD/JPY. However, the Bank of Japan (BoJ) is likely to contribute more actively in the coming months. Indeed, as its monetary policy is highly focused on the inflation target, pressures are mounting on the BoJ to provide more support to inflation. This is especially true as inflation surveys do not match the BoJ’s outlook.

Households surveys show that a huge majority expects a slight rise, mostly caused by increases in food and gasoline prices. More durable drivers like wages are not expected. Coupled with weakening growth potential expectations, household surveys indicate that the “Abenomics” effect is wearing off.

The inflation outlook from corporations, which was recently added in the quarterly Tankan, also highlights a more modest view on inflation than the BoJ. Indeed, none of the enterprises surveyed see inflation higher than 2% (excluding the VAT effect) even on a 5-year horizon. Finally, economists surveys and market expectations (through the 5y5y inflation swap) also confirm a weakening outlook, suggesting that without additional easing from the BoJ, the 2% target is unlikely to be met.

The second round of sales tax hike unlikely to be postponed A postponement of the second phase of the sales tax rise is unlikely as it would further undermine the credibility of Abe’s structural reforms while damaging the relationships with the Ministry of Finance and the BoJ, as both entity endorse a further rise. As a result, conditions are likely to be increasingly supportive (especially for the Nikkei) in the near future to favour the endorsement of the second sales tax hike and to cushion any negative effects caused by it. Among regional spending programs, a lower corporate tax and GPIF diversifications, stimulus from the BoJ is expected. As a result, any weakness in USD/JPY should only be temporary”.

SwissQuote usdjpy oct14

(Source: SwissQuote)