Gold set for solid weekly gain as EU stocks tank

13 June, 2016

Gold is on track to chalk up solid gains for a second week running. Although the dollar has bounced back in the last couple of days of this week, it had fallen sharply the week prior as contrary to the FOMC’s last meeting minutes, the Fed made it clear that a rate hike on Wednesday of next week was highly unlikely as it expressed concerns about the May US jobs report and the potential implications of Britain leaving the EU (Brexit). The probability of a July rate rise has also fallen quite sharply.

Consequently, the Fed will continue to watch new incoming data like a hawk, especially this month’s jobs report which will be released in early July. Next week, there will also be a few important US macro pointers which may impact the timing of the next rate hike. These include retail sales (Tuesday); Producer Price Index and industrial production (Wednesday), and the main measure of inflation: Consumer Price Index (Thursday).

In Europe, yields on 10-year German Bunds hit repeated all-time lows and on Friday they stood at just 0.019 per cent. This came as the ECB started purchasing bonds of corporations as part of its wider quantitative easing programme. UK’s equivalent 10-year yields also hit a record low as bond prices rose. In addition, the European stock markets, which had been lagging Wall Street for weeks anyway, fell sharply in the second half of the week.

The falling stock markets and bond yields boosted the appeal of the non-interest-bearing, buck-denominated and safe haven gold. Sentiment has been downbeat in Europe because of Brexit fears and also the lack of economic growth despite the ECB’s on-going monetary efforts. With the EU referendum now less than two weeks away, the cost of protecting against falls in the pound has soared to record levels, even as betting odds on ‘remain’ have risen to a good 75 per cent, according to BetFair.

But has gold gone too far, too fast in this stage of the bull cycle? Well, not really is the short answer. For after all, it continues to remain inside a larger consolidation pattern between $1200 and $1300. The bulls will be pleased to see the prior broken resistance at $1200 once again holding up as support. In addition, gold has risen back above the 21-day exponential and 50-day simple moving averages. These moving averages are pointing higher and are above the slower 200-day moving average. Clearly then, the underlying trend is bullish even if gold is effectively still in a larger consolidation.


Source link  
Gold surges to major $1250 resistance as uncertainty prevails

Gold surged Thursday on a breakout of its previous consolidation to hit and slightly exceed major technical resistance at $1250, a level not seen since early November...

Gold remains vulnerable amid hawkish Fed, strong dollar, equity highs

Gold has climbed sharply since the beginning of the year as the US dollar has pulled back from its late-2016 highs and the US Federal Reserve has exercised characteristic restraint in raising interest rates further after the last rate hike in December...

Gold well-supported on safe-haven flows, lagging dollar

Increasing political and economic uncertainties under the new Trump Administration, coupled with a sliding US dollar since the beginning of the year, have led to a sharp rise in gold prices for more than a month...


Gold pressured as dollar and equities remain supported

As the US dollar found some new life on Thursday and US equity markets hovered right around their new all-time highs, gold extended its recent pullback well below the $1200 handle. Since late December, the price of gold had been in a sharp relief rally from its 10-month lows around $1125 support...

Crude oil maintains bullish trend

Oil prices were initially weaker at the start of the new week, but they have now recovered to trade almost flat at the time of this writing. At the weekend, the OPEC and some producers outside of the group met to discuss the progress of their oil production deal...

Trump press conference fails to deter equity bulls

President-Elect Donald Trump spoke on Wednesday morning at his first formal press conference since the November elections, and the markets were all ears. Trump covered a lot of ground with multiple topics that included...


Gold ripe for potential relief rally

The charts tell a clear story of the unrelenting plunge in gold prices since early November. This steep dive has been the result of several related factors, all of which have the potential to extend well into the new year. These largely Trump-driven factors include...

Could EUR/USD finally break 1.05 on this FOMC day?

The market is demanding a rate rise and the Fed better deliver it today, for if it doesn’t the bank’s credibly will be severely damaged. There is really no excuse not to do so. Economic data has been improving, financial markets are calm...

Mixed Jobs Report Keeps High Fed Expectations Intact

As we noted the day before Friday’s US jobs report, only a significantly worse-than-expected reading for November would have likely made the Federal Reserve’s next interest rate decision more difficult...

  


Share: