Precious Metals gained some speed yesterday. August Gold (gcq8) jumped more than 4% and broke at the same time the $865-912 range holding for a month. It is a significant move as it opens the way to $935-940. A daily close above $967 will imply a retest of the $1000 level at least . We continue to prefer the Long side as we expectfurther USD weakness.
"There is the risk that while the Federal Reserve has to an extent 'talked the talk' regarding inflation, it is failing to 'walk the walk' by raising interest rates in order to combat the real threat posed by surging inflation," wrote Mark O'Byrne, executive director of Gold and Silver Investments Ltd., in a research note. Inflation in the U.S. remains higher than interest rates and continuing negative real interest rates could lead to an "inflationary spiral," he said. That "will likely lead to sharply increased investment demand for gold to hedge against burgeoning stagflation," O'Byrne said.
Friday, June 27, 2008
Sunday, June 15, 2008
EUR/USD Technical Analysis
In eur/$, the bigger picture view remains unchanged as trade from the April high at 1.6015 is seen as a large correction, with eventual new highs above 1.0615 after. Strategically, been suggesting to fade the extremes of the shorter term range and aggressively trail stops, which has worked quite well (see daily chart below) over the last few months. However, the market may finally be ready to resolve this multi-month range, so it appears to be time to switch from that strategy (of fading extremes) to one of buying (and holding) for a resumption of the longer term uptrend. The market is still forming a large pennant/triangle since Apr, generally seen as a “continuation” pattern. These patterns break down into 5 legs, with the last few days of weakness potentially being that final leg, and suggesting that a sharp, upside resolution may be ahead (see “ideal” scenario in red on daily chart below). Short from the Jun 6th sell at 1.5745 and for now, would take profits here (currently at 1.5400 for a 345 tick profit). Note that there is some risk for a downside break (not currently favored, but would target 1.5150/75 as part of this larger correction), so would wait to be sure that the market closes above the base today (currently at 1.5370/85) before reversing to the long side (may have to buy at a slightly higher price but the risk would be significantly lower). Would then use a close below as a stop.
Longer term, the long held bullish bias remains in place at the market is chopping within the final upleg in the rally from the June 2007 low at 1.3265 (wave V, see numbering on weekly chart/2nd chart below). However, this final upleg (which began at the Dec low at 1.4315) is not yet “complete” with gains above the April high at 1.6015 still needed (see shorter term). For now, maintain the long held, longer term bullish bias but will start to look for signs of a more important top (for a minimum 3-6 months and likely longer) on gains above 1.6015.
Longer term, the long held bullish bias remains in place at the market is chopping within the final upleg in the rally from the June 2007 low at 1.3265 (wave V, see numbering on weekly chart/2nd chart below). However, this final upleg (which began at the Dec low at 1.4315) is not yet “complete” with gains above the April high at 1.6015 still needed (see shorter term). For now, maintain the long held, longer term bullish bias but will start to look for signs of a more important top (for a minimum 3-6 months and likely longer) on gains above 1.6015.
Saturday, June 14, 2008
GOLD REPORT
A report from Standard Bank said that the market is expected to remain confined to a broad near-term trading range between $845/oz and $954.5/oz.
"A neutral view is expressed within the described parameters, but our primary view is for the short-term bear trend - from $1,030.8/oz - to establish a support base around $845/oz," added the Standard Bank Report.
The report advises traders to enter into long positions towards the lower end of the range.
"A secondary support band exists between $860/oz and $858.5/oz, while the $905/oz to $908.7/oz area is highlighted as an important interim resistance zone - gold strength above this area will initiate a move towards $935," said the report.
The report forecasts gold to strengthen beyond the levels of $954.50/oz, indicating the recommencement of the primary bull trend. With such a development yielding, an eventual move beyond $1,030.80/oz is expected, with a target of at least $1,055/oz.
"The market would be expected to advance into the $1,080/oz to $1,120 area/oz," added the report.
A sell signal would be triggered through $837/oz, exposing the yellow metal to $785/oz to $765/oz support zone, but the weaker bias may falter at the 52-week moving average, the report concluded.
"A neutral view is expressed within the described parameters, but our primary view is for the short-term bear trend - from $1,030.8/oz - to establish a support base around $845/oz," added the Standard Bank Report.
The report advises traders to enter into long positions towards the lower end of the range.
"A secondary support band exists between $860/oz and $858.5/oz, while the $905/oz to $908.7/oz area is highlighted as an important interim resistance zone - gold strength above this area will initiate a move towards $935," said the report.
The report forecasts gold to strengthen beyond the levels of $954.50/oz, indicating the recommencement of the primary bull trend. With such a development yielding, an eventual move beyond $1,030.80/oz is expected, with a target of at least $1,055/oz.
"The market would be expected to advance into the $1,080/oz to $1,120 area/oz," added the report.
A sell signal would be triggered through $837/oz, exposing the yellow metal to $785/oz to $765/oz support zone, but the weaker bias may falter at the 52-week moving average, the report concluded.
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