Friday, December 24, 2010

FOREXYARD: Forex News Blog

FOREXYARD: Forex News Blog

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Daily Decline in Spot Gold Continues

Posted: 23 Dec 2010 06:40 AM PST

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Spot gold prices have fallen at the beginning of the New York trading session. The daily candlestick suggests more drops in the price may follow with support coming in at a short term trend line.

Following the earlier drop in price during the European trading session, spot gold continues to fall as trading gets underway in New York. The price of spot gold is currently down at $1,375 from an opening day price of $1,387.

Further declines in the price may occur as today's candlestick is taking the shape of a shaved head which indicates bearishness in the commodity.

Support for spot gold is found at a rising short term trend line off of the late November and December lows. Today the support comes in at $1,365. Resistance is found at the mid-December high at $1,392.

Gold

Low Volatility Characterizes End of Year Trading

Posted: 23 Dec 2010 02:37 AM PST

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Gold prices were relatively unchanged yesterday as the commodity traded in a tight range. Yesterday's trading had low volatility and light volume that characterizes end of year trading.

The price of spot gold fell marginally to $1,387.36 after opening the day at $1,389.31.

During yesterday's trading price movements were subdued with little volatility as the price of spot gold moved between an $8 price range. The 20-day Average True Range is more than twice that at 17.

Many traders are attempting to balance their funds and taking risk off the table as the New Year approaches, booking gains in the commodity that is up more than 25% this year. The open interest in the number of Comex gold future contracts has dropped to 582, 133 lots from 650,764 in early November.

The movement in the dollar has also limited the volatility of gold prices. The EUR/USD traded in a tight range yesterday, closing down at 1.3112 after opening the day at 1.3133. Gold prices often take direction from the dollar's movement as a stronger USD makes gold prices more expensive for those traders who do not hold dollars.

Volatility may pick up this afternoon with the release of US Core Durable Goods Orders as well as weekly unemployment claims. Both are scheduled for release at 13:30 GMT. US New Home Sales are also due out at 15:00 GMT. Better than expected numbers may strengthen the dollar and in turn traders may bid the price of spot gold lower. The next support level rests at a rising support line that comes in today at $1,364.

GBP/USD Trend Turns Bearish

Posted: 23 Dec 2010 12:09 AM PST

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Yesterday's drop in the value of the Cable sent the pair below its long term trend line indicating a possible shift in the trend to the downside.

At the end of yesterday's trading, the GBP/USD finished at 1.5419, a price that coincides with the all-important 200-day moving average. Yesterday's closing price is decisively below the trend line on the daily chart that extends from the May and June lows of this year.

This indicates a potential shift to the downside for the intermediate trend. The long term charts also show falling trend lines. A close below the rising trend line on the weekly chart will reinforce the shift in the trend. Looking to the monthly chart, falling stochastic indicate further bearishness may be in store for the pair.

A short term falling trend line has been established at the high in November with a reaction point in mid-December.

Price levels that should serve as supports are yesterday's low at 1.5355, followed by the 50% Fib retracement of the May to November move at 1.5260, as well as 61.8% Fib at 1.5020.

GBPUSD

USD Expecting High Volatility ahead of Holiday Weekend

Posted: 22 Dec 2010 11:22 PM PST

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The EUR/USD has entered a steady downturn, pushing the pair towards the 1.31 price level in yesterday's trading. Interestingly, however, is that the US dollar is bearish against most of its rivals. Europe's persistent debt woes and the USD's safety status away from Europe's concerns and Korea's tensions have resulted in such an outcome.

With a heavy US news day ahead, the dollar could see a period of intense volatility just before the Christmas holiday weekend begins. American banks will be closed Friday in observance of Christmas Eve, which means most traders will try to stabilize or hedge their portfolios before the close of today's market. Traders should be cautious regarding today's volatility as a result.

Here are a few of today's leading events:

13:30 GMT: USD – Core Durable Goods Orders

This monthly report measures the percent change in durable goods orders from manufacturers, excluding the transportation industry. Today's expectations are for a growth of 1.7% in core durable goods orders, up from last month's decline of 2.7%. If this forecast comes true, traders could see some added value jumping into the USD before the end of the American trading sessions.

15:00 GMT: USD – New Home Sales

The New Home Sales report provides an accurate gauge for the number of new single-family homes sold during the previous month. As a leading indicator of housing and construction growth, this report has a direct correlation with the strength of the US economy. Today's forecast is for higher growth than last month, indicating a positive return to economic normalcy is beginning to get underway. Such an outcome should boost the USD ahead of the new year.
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