FOREXYARD: Forex News Blog | |
- Commodities Appear Poised for Upward Correction
- 2011 Gold Forecast – Benefits and Risks
- Gold Has Strong Support at $1365, Silver Remains above $27.00
- Gold at Two Week High over Euro-Zone, North Korea
- Gold’s Cyclical Downturn Could Reach $1280
- Gold and Silver Expecting Cyclical Retracement?
- Is the Price of Gold Heading for $2,300 an Ounce?
- Fed Under Fire while Gold Surges to New Highs
- Can we Expect Another Rally for Gold prices?
- Gold Prices Predicted to Fall in 2010
- Gold Recovers as USD Rally Slows
| Commodities Appear Poised for Upward Correction Posted: 24 Jan 2011 07:00 AM PST
It appears the decline in US dollar values has not yet been priced into commodities and we may be expecting a major correction in physical asset prices this week as a result. So far the EUR/USD has climbed over 0.9% on the day, but Gold, Silver, and Crude Oil prices are still falling. Either the market is pulling out of commodities in tandem with the US dollar as part of a portfolio diversification in equity markets, or the USD’s plummet has not yet been priced in. Either way, commodities should climb in the days ahead. Here’s why: Gold and Silver are both approaching significant support barriers. Gold’s 3-month psychological support level at $1,335 an ounce is near at hand and we are already beginning to see Gold quiver and shake as it reaches that price, hinting at its upcoming bounce. Silver’s month-and-a-half support line at $27.00 an ounce is literally mimicking Gold’s price behavior. Both should see an upward retracement of around 3-5% in the forthcoming two weeks of trading as a result of these technical indications. Crude Oil likewise appears to be approaching a relevant price barrier near $87.50 a barrel. However, we don’t see the same quakes on oil prices as we do in precious metals, suggesting a fundamental valuation is in play on Crude Oil. In short, if any of the commodities are to break through their immediate support levels, it looks like Crude Oil has the best chance. On the other hand, the heavy downward movement of the USD today suggests that all commodities should experience a corrective upturn this week. Look for the swing and capture the bullish movement as it heads your way! |
| 2011 Gold Forecast – Benefits and Risks Posted: 21 Dec 2010 02:00 AM PST
The dominant story regarding Gold is the bullish run we’ve experienced since the financial crisis of 2007-2008. More recent news shows a continuation of this trend, but how do we interpret the widening fluctuations in price over the past two months? Starting July 28th the price of Gold began a sharp bull run that saw little to no retracement. On October 15th the price came down sharply, marking the first retracement since late-July, moving from $1385.15 to $1315.30 over a 7-day period. Ever since, we’ve seen the price of Gold move within a broadening range, but still bullish. Three explanations have been circulating. The first argues that the approach of the holiday season brings wider price swings as currency values get boosted by increased retail sales and heightened travel among consumers. These price swings begin to compete with the rising price of Gold, creating broader movements. The second takes the same approach, but downplays the holiday aspect. As winter months approach in the Northern Hemisphere, a natural increase in commodity prices (particularly Crude Oil and Natural Gas) occurs, which affects US dollar values, which in turn affects Gold. These first two explanations mirror each other rather well and there doesn’t seem to be any indication that they both can’t be right. The third explanation has to do with end-of-year profit-taking and forecasting. The close of any calendar year brings forth article after article forecasting what will be in the new year, economically speaking. These forecasts bring with them portfolio adjustments by most traders, hedge funds, and investment firms which leads to the closure of existing positions, increased spending from year-end holiday bonuses, and a shift in exposure. As a result, we see wider fluctuations among prices as traders anticipate the unchanging yet so-called “forecast to change” market. But what’s changed? Gold prices are still moving up and forecasters are expecting them to continue unabated in 2011. Some estimates put the price near $1800 an ounce by this time next year. Without taking a stance as to the validity of these positions, one is reminded of the same attitude towards the housing market pre-2007. Are we seeing the formation of a Gold Bubble? No doubt long-term Gold traders made lucrative profits over the last two years. Such confidence building stability makes me suspect that their confidence in Gold won’t likely waver in the months ahead. But wasn’t that one of the many causes of our current economic situation: blind confidence in an asset which proves profitable time and time again? After all is said and done, Gold still looks to continue rising in 2011. Traders may expect some downward retracements at the starting months of 2011 from a post-holiday/post-winter cooldown in spending combined with an eventual warming temperature. But overall, the adage “the trend is your friend” seems to apply. |
| Gold Has Strong Support at $1365, Silver Remains above $27.00 Posted: 26 Nov 2010 12:26 AM PST
Gold continued its decline in European trading today, dropping to $1365 an ounce from an overnight price of $1372. The decline came as the dollar strengthened further versus the euro, as the ERU/USD pair reached a two week low of 1.3260. The drop came as concerns intensified that Ireland's debt problems will widen to Portugal and Spain. Though Gold prices still receive support from the euro-zone debt crisis as investors turn to the precious metal as an alternative investment, the strong dollar reduces the appeal of the metal as it makes it more expansive. It seems that Gold has a strong support at $1365 an ounce, as the euro-zone debt concerns persist and the tension between North and South Korea remain in the background. Trading returned to normal market conditions today as U.S banks open after yesterday's holiday, however, the lack of major news events will likely keep the markets subdued ahead of the weekend. Gold will likely remain between $1365 and $1372 for the remainder of the day. Silver continues to follow Gold's trading pattern, also seeing a decline in today's trading, albeit it still remained within its recent range. Silver for immediate delivery declined to $27.25 an ounce, after briefly dropping to a low of 27.02. Silver, however, is still up overall this week. The price reached $29.36 an ounce on Nov. 9, the highest level since 1980. |
| Gold at Two Week High over Euro-Zone, North Korea Posted: 23 Nov 2010 12:18 PM PST
Europe's sovereign debt concerns and escalating tensions between North and South Korea boosted Gold prices to a two week high as investors fled to the safety of the metal. Political and economic uncertainty tends to benefit the commodity as it is perceived as a haven investment. The renewed investment wave in the metal began as the Irish debt crisis unfolded as people began shedding risk. Gold futures for December delivery rose $16.50, or 1.2%, to $1,374.30 on the Comex in New York. Discouraging signs from the U.S economy also contributed to today's rally. It is difficult to say. However, whether today’s gains signal a short-term bounce or return to the momentum that has driven prices to a record high of $1424 an ounce earlier this month. Volatility has been extremely high in Gold trading over the past few months; driven mostly by economic growth expectations from China and uncertainty about the pace of rising demand. Monetary policy in the U.S and China tends to have the strongest impact on the commodity. Gold's rally was hindered by expectations of monetary tightening by China that may precede other developing nations thus curbing demand. Gold traded lower as investors were liquidating their positions throughout last week, ahead of today’s options expiration and as the rollover continues from December futures into 2011 contracts. As options expire Gold prices could trend lower. Overall the momentum seems to have subsided slightly with investors getting more nervous as we get close to year end. It is likely that Gold prices will remain higher for this week, heading to the long holiday weekend in the U.S as economic and political turmoil seems to dominate market sentiment. Any escalation in relations between the Koreas' or further disappointing news from the euro-zone will likely push Gold above $1380 an ounce. We are, however, unlikely to see Gold levels breaching $1400 again ahead of the new year. |
| Gold’s Cyclical Downturn Could Reach $1280 Posted: 23 Nov 2010 02:43 AM PST
As I mentioned in an article yesterday, the price of Gold has been operating in long-term cycles of advance-and-retreat for the past year-and-a-half. While the overall trend is bullish for precious metals (Gold, Silver, and Platinum), there are periods of downturn in each. Looking at our chart below, it seems as if evidence is mounting for just such a movement. Expecting a bearish correction is different than claiming a trend reversal. I am in no way disagreeing with other analysts whose claims place precious metals within a bullish channel. To the contrary, I agree with such claims, but would like to recognize the opportunities for short-term profits within the cyclical fluctuations of these instruments. As we can see in the chart below, Gold has been moving with a rather distinctive pattern. Marked with a red line on the chart below, we can see the general direction of the overall trend of Gold. But notice that the price deviates away from this trend with sharper upturns. It's as if the market is slamming its foot on the gas pedal and then hitting the brakes, over and over. I call this the "teenage drag-racer" formation. But it goes beyond chart formations. We have a descending RSI, moments away from exiting the over-bought region. We also have a recent bearish cross on the Stochastic. Both indicators suggest bearishness. Also, if we follow our "teenage drag-racer" pattern, we can pick a great entry/exit point for traders. Those going short on Gold may want to place their Limits near $1280. Those waiting for an entry point for another Buy position on the general uptrend should likewise aim for $1280 an ounce. If the bullish channel persists through the winter season, as it should, targets upward of $1500 an ounce may not be far off following this retracement. |
| Gold and Silver Expecting Cyclical Retracement? Posted: 22 Nov 2010 11:27 AM PST
We've been watching the price of precious metals soar over the past several months and many analysts will tell you to expect a continuation of this trend. We must not forget that global economies are still suffering financial concerns and that normalcy remains elusive to the current state of the world economy. In such an environment, safe haven investments – like Gold and Silver – tend to rise. But to short-term, intraday traders there is yet another side to this story. While it is true that Gold and Silver are on the rise, and will likely remain so for some time, it is also true that every trading instrument moves in cyclical patterns. Gold and Silver each possess a number of technical indicators which point to a buildup of bearish pressure. This is clearest on the Gold weekly chart (see below). A pattern has emerged on the price of Gold which is worth exploring in greater detail. Stay tuned this week for a deeper look into the cyclical pattern of Gold which has developed over the past year-and-a-half, as well as its implications for other precious metals, such as Silver. Gold – Weekly Chart |
| Is the Price of Gold Heading for $2,300 an Ounce? Posted: 11 Nov 2010 06:35 AM PST
Debate over the Fed's recent QE2 maneuver has been generating some interesting volatility on commodity prices, particularly Gold. We've seen the US dollar gaining strength as investors anticipate the possibility of renewed inflationary growth in the US, but occasionally there is similar counter-pressure from investors working to price in the devaluation which must naturally accompany a money-printing policy such as QE2. Commodity prices appear to be rising despite a strengthening USD, but there have been a few minor blips in downward movement amid growing concerns as to the effect of QE2. Moreover, the sudden weakness of the EUR in recent days, due to debt concerns in Europe's periphery, has also added to these fluctuations in both the USD and commodity prices. Previous articles have harped on the notion of a rising price of Gold, and nothing really seems to be able to change that analysis. We've seen Gold reach a nominal record high of $1,420 an ounce, even though its true record, after adjusting for inflation, was reached about 30 years ago. What is interesting in this observation is the price reached at that time, in today's dollars. When Gold took off in the 1980s, its value in today's dollars was around $2,300 an ounce. If today's price of Gold is heading in a similar direction, then right now may be the best time imaginable to open a Gold Trading Account and start making profits. What are you waiting for? |
| Fed Under Fire while Gold Surges to New Highs Posted: 09 Nov 2010 04:35 AM PST
With growing criticism from home and particularly abroad, the Federal Reserve's decision to pump additional $600 Billion to the U.S economy remains a center of controversy. The EUR/USD pair has seen fluctuations averaging 100 – 150 pips a day since the Fed's announcement. This trend is likely to continue as investors continue to battle long term negative Dollar sentiment and short term economic data publications. A major burden to global recovery these days is the frequent and sharp movement in exchange rates, especially between the euro and dollar. This creates unnecessary market uncertainty and hinders investment. The additional $600 Billion only exacerbated that problem. The recent release of the Non-Farm Employment data as well as several of this week's upcoming economic indicators raise the question of whether or not it was a premature move or indeed completely unnecessary. The Fed's main reason for the additional stimulus is the persistently high unemployment rate that has been hovering near 10% for the past year. However, last week's Non-Farm data showed a surprising increase in employment levels that beat investors' expectations; this followed a revision upward of Septembers' job loss figures, meaning, the economy lost less jobs than previously published. Though the unemployment rate remained unchanged this can be attributed to previously discouraged workers returning to the job market. While it is clear the job market is still struggling as evident by the first time Unemployment Claims numbers, which refuse to decline, some optimism may be in place. An indicator that may support this assumption may be Friday's Prelim UoM Consumer Sentiment report which is expected to show improvement, rising to 69.2 from 67.7 the previous month. While it is still well below the 89 averaged prior to the recession, this level will be the highest since June. One aspect that will undoubtedly benefit from the weak dollar is the deficit. The Trade Deficit likely narrowed in September, a report is expected to show Wednesday. A weak domestic currency helps exports by making the goods cheaper overseas. Increased exports mean increased production levels and a boost to economic recovery and growth. The problem is that a weak currency also makes oil and other commodities and products more expensive. Over supply of currency also increases inflation in the long run which will further erode the value of goods. Meanwhile the main beneficiary of the currency wars has been Gold which surged to record levels this week, currently trading at $1420 an ounce. |
| Can we Expect Another Rally for Gold prices? Posted: 29 Oct 2010 03:08 AM PDT
After reaching a record high of $1,376.70 an ounce on Oct. 14th, Gold prices have been falling steadily ever since, stabilizing around the $1335 level. Can we expect another rally for Gold prices? The answer may come after next week's FOMC meeting minutes on Nov. 3rd. Gold has been gaining from the start of the recession. Investors often turn to the metal as an alternative investment in times of financial instability and more recently as a hedge against inflation. This became the main fear as central Banks around the world embarked on the path of quantitative easing, pumping money in to the ailing economy in order to spark growth. However, such extreme measures can often lead to an oversupply of currency in the market and therefore, inflation. With the U.S economic recovery struggling to take hold, the Federal Reserve is again facing the decision of whether or not to expand quantitative easing. News of such deliberations propelled Gold prices to record highs during October. Prices have since dropped 4% on profit taking, accelerated by reports from the WSJ this week that the second round of quantitative easing would happen at a moderate pace. Originally investors were expecting a much larger amount to be pumped into the economy. This anticipation weakened the USD, making commodities such as Gold cheaper. The value of the USD will again be behind Gold's levels heading to next week and beyond. Investors are predicting that monetary easing will lead to a sharp devaluation of the Dollar, which combined with inflationary fears will likely boost Gold prices. However, this scenario is based on the assumption the Federal Reserve indeed undertakes further quantitative easing measures at sufficient levels. The recent slew of positive economic data from the U.S puts some doubt to these expectations. Gold will likely see a sharp drop if the Federal Reserve decides to take small steps or no steps at all combating the stagnating growth. In such a case we may see gold prices recede back to around $1200 throughout November. Another major indicator to affect Gold prices next week will be the Non-Farm Payroll Data which will be released Friday, Nov. 5th. As unemployment remains the main concern for the Federal Reserve, the data will likely affect their assessment of the U.S economic recovery as well as provide expectations for their next meeting. While it is unlikely Gold prices will reach Oct. 15th levels as the hysteria over monetary easing subsided and investors believe Gold has become overbought, any negative data from the U.S will likely push Gold prices higher, possibly to levels around $1350 – $1360. |
| Gold Prices Predicted to Fall in 2010 Posted: 28 Dec 2009 11:13 PM PST
Yesterday’s expected decline in the value of the US Dollar did indeed take place, but not nearly as sharp as some were expecting. A mild drop against the Euro and British Pound occurred during the opening of the American markets yesterday, and our technical charts appear to be showing that the greenback’s downturn could have already finished. There is the possibility that reports yesterday of a possible buy-up of US Dollars before the year ends helped stabilize the currency and prevented it from dropping too far. Today’s CB Consumer Confidence report has some investors anxious as a positive result could cause this buy-up of dollars before year-end as they prepare for a rise in interest rates possibly sooner than expected. Also, as we put Christmas shopping behind us, there may still be a surge in post-holiday sales remaining, but the boost in Gold prices heading into the holidays has apparently come to an end. We saw Spot Gold prices climb above $1,200 an ounce in the past month and a half, but the precious metal now sits steadily near $1,100 an ounce. Will Gold prices spike back up? Or will they remain in a downward posture? Believe it or not, the chance that Gold prices will continue to rise in early 2010 is possible, but less likely now than many were forecasting 2 months ago. The strength of the US Dollar may take off in the New Year as nations attempt to anticipate the expected rise in interest rates which will no doubt happen at some point in the coming year. Once the USD takes off, Gold will plummet back down to earth, and Silver and Platinum prices won’t be far behind. I say, make it your New Year’s resolution to take advantage of this price movement. Open your account now and get ready for these coming profits! |
| Gold Recovers as USD Rally Slows Posted: 24 Dec 2009 05:08 AM PST
Gold prices recovered over the past two days as the rally in the USD halted after the release of a disappointing New Home Sales report yesterday. With the greenback under pressure and extremely low levels for Gold, investors have taken advantage of the low prices to return investing in Gold. Gold for immediate delivery gained $17.05, or 1.6% to $1,104.60 today. Since Gold levels and the USD tend to have an inverse relationship, Gold pulled back in recent weeks as investors have turned to the Dollar after the release of several better than expected economic figures. These boosted confidence in the U.S economic recovery and expectations the Federal Reserve will tighten monetary policy and raise interest rates earlier than expected. The loose monetary policy has been instrumental in the rise in Gold levels this year. |
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