Month: September 2012

Source: ForexYard

After seeing significant gains across the board last week, the euro reversed some of its recent bullish movement yesterday during a slow news day. That being said, investors were hesitant about going overly bearish on the currency ahead of potentially significant news later this week. Today, traders will want to pay attention to the US Trade Balance figure, set to be released at 12:30 GMT. If the indicator signals a further slowing down in the US economic recovery, speculations that the Fed may soon take steps to stimulate growth may go up, in which case the euro could extend its gains from last week.

Economic News

USD – Potential Fed Action Keeps USD Bearish

The US dollar spent much of the day range trading yesterday, as a lack of significant news combined with the possibility that the Fed may soon act to boost the US economy, kept the currency near its recent lows. Against the Swiss franc, the dollar gained 35 pips during the first half of the day to trade as high as 0.9483. That being said, the dollar was once again bearish by the end of European trading, and eventually fell to the 0.9460 level. Similarly, after gaining 12 pips during morning trading, the USD/JPY erased most of its gains and by the end of the day was trading at 78.25.

Today, the dollar has the potential to recoup some of its recent losses following the release of the US Trade Balance figure at 12:30 GMT. Any better than expected news could weaken expectations that the Fed is getting ready to initiate a new round of quantitative easing, which may lead to higher demand for the greenback. On Thursday, the FOMC Statement may tell us what, if any, plans the Fed has to stimulate growth in the US economy.

EUR – Despite Slight Losses, EUR Remains Bullish

After reaching its highest level in close to four months against the US dollar and a two-month high vs. the JPY on Friday, the euro took modest losses during trading yesterday, ahead of potentially significant news later this week. The EUR/USD dropped close to 50 pips during overnight trading yesterday to reach as low as 1.2769, still well within reach of its recent high of 1.2815. Against the JPY, the common currency fell just over 30 pips to reach as low as 99.95. A slight upward correction later in the day brought the euro to the 100.05 level.

Today, the euro may see another slow trading day as investors anxiously await a German court ruling on Wednesday regarding the legality of euro-zone bailouts to indebted countries in the region. That being said, the EUR/USD could turn bullish again if the US Trade Balance signals a further slowdown in the US economic recovery. At the same time, if Wednesday’s court decision in any way limits the ECB’s ability to combat the euro-zone debt crisis, the common-currency may reverse some of its recent gains.

Gold – Gold Comes Off 6-Month High

Gold reversed some of its recent gains throughout European trading yesterday, but largely remained within reach of its recent six-month high as investors remained convinced that the Fed is getting ready to take steps to boost the US economy. The precious metal fell close to $9 an ounce during the first part of the day to reach as low as $1727.15 before bouncing back to the $1730 level by the end of the day.

Today, gold traders will want to pay attention to the US Trade Balance figure, set to be released at 12:30 GMT. Any better than expected news could result in gains for the USD, which may reduce demand for gold and lead to additional losses for the precious metal during mid-day trading.

Crude Oil – Oil Range Trades Ahead of Fed Decision

Crude oil spent most of yesterday’s session range trading, as investors remained anxious about possible action by the Fed later this week to boost the US economic recovery. Crude dropped just over $1 a barrel during morning trading to reach as low as 95.34. An upward correction later in the day brought the commodity back above the $96 level.

Today, traders will want to pay close attention to the US Trade Balance figure and its impact on the dollar. Any better than expected news may boost the greenback and signal to investors that demand for oil in the US will go up, which may then lead to gains for crude during afternoon trading.

Technical News

EUR/USD

The Bollinger Bands on the weekly chart are narrowing, signaling that this pair could see a shift in price in the coming days. Furthermore, the Williams Percent Range on the same chart has crossed over into the overbought zone, indicating that the change in price could be downward. Opening short positions may be the wise choice for this pair.

GBP/USD

The daily chart’s Relative Strength Index is approaching overbought territory, signaling that a downward correction could occur in the near future. Furthermore, the Slow Stochastic on the same chart has formed a bearish cross. Going short may be the wise choice for this pair.

USD/JPY

While the weekly chart’s Williams Percent Range has dropped into oversold territory, most other long-term technical indicators show this pair range trading. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.

USD/CHF

The daily chart’s Relative Strength Index is currently in oversold territory, which indicates that this pair could see a bullish correction in the near future. Additionally, the Williams Percent Range on the weekly chart has fallen to the -90 level, giving further support to the theory of impending upward movement. Going long may be the smart choice for this pair.

The Wild Card

USD/HUF

A bearish cross on the daily chart’s MACD/OsMA indicates that an upward correction could occur in the near future. Furthermore, the Williams Percent Range on the same chart has dropped into oversold territory. This may be a good time for forex traders to open long positions ahead of a possible upward breach.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Forex Daily review brought to you by REAL FOREX | www.Real-forex.com

Tracking the EUR/USD pair

EUR/USD

GBP/USD

AUD/USD

USD/CHF

By TraderVox.com

Tradervox.com (Dublin) – The euro was the major beneficiary last week, increasing to eight-month high against the dollar on European Central Bank bond-buying plan and poor US data which sparked speculation of QE3. Will this continue through this week? Here is an analysis of major pairs this week.

EUR/USD: the pair had a positive week last week, starting the week at 1.2624 and dropping lower only to make a spirited comeback to touch 1.2814. There is an emergence of an uptrend support indicating that the pair may remain high this week. Further advance is unlike and the pair is projected to remain within range.

GBP/USD: the pair started the week at 1.5865 dropped down to 1.5850. The pair then rebounded with a spirited fight to close the 1.60 line to 1.6034. The pair retreated to close the week at 1.6007. Strong data from the UK are pushing the pound, and the gains are supported by speculations the BOE will not add stimulus. Speculation of QE3 and the FOMC meeting will probably keep the pair high as the dollar weakens.

USD/JPY: the pair started the week with a rise but speculations of a third round of quantitative easing and poor labor department report sent the pair down as the yen strengthened to close the week at 78.25. The pair will remain within range with few attempts upwards this week as the market waits for the FOMC decision.

USD/CHF: the pair started the week at 0.9550 and climbed to a high of 0.9583. As speculation of QE3 in US mounted, the pair dropped to a low of 0.9433 but pared some of the loss to close the week at 0.9438. With a quiet week ahead, the pair is expected to remain neutral with attempts downward prior to the FOMC meeting.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Source: ForexYard

The euro remained within reach of a four-month high against the US dollar in overnight trading, as speculations that the Fed will initiate a new round of quantitative easing on Thursday kept demand for the common currency high. Most other currencies and commodities range traded throughout the Asian session, as investors remained hesitant to open new positions ahead of the Fed’s decision.

Main News for Today

US Trade Balance- 12:30 GMT
• Today’s news is forecasted to come in at -44.2B, slightly worse than last month’s -42.9B
• If the news comes in as forecasted, the USD could extend its recent losses against the JPY, CHF and EUR

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By MoneyMorning.com.au

It’s good to write to you again, after taking a few weeks off for the Cowie family holiday in sunny Queensland. It was great to warm up under that big bright light in the sky that we don’t see much during a Melbourne winter!

I’d planned to cut back on my Diggers and Drillers weekly updates while defrosting, but Mr Market was busy while I was away, and so I ended up writing some of my biggest updates in months.

Probably the biggest news in the last few weeks was the well overdue rallies in gold and silver. About half of the D&D tips are precious metals stocks, and most of these have been travelling nicely in recent weeks.

Gold’s recent move has been astounding. Since the start of September it has surged 8.8% from US$1600 to hit US$1742 last week. The last stock I tipped is a gold producer and is sitting on a 19% gain in less than a month.

Gold – Finally Following the Script Once More

Click here to enlarge

I thought a rally in gold was on the cards, which is why I tipped a gold stock in August. But I must admit I didn’t expect it to happen so fast.

Go Time For Gold

The thing that alerted me that it was almost ‘go time’ for the gold price was that it had gone nowhere for 12 long months. The few times this has happened in the last ten years, gold has then put in a ‘catch up year’. By this I mean that in the following 12 months, gold puts in roughly twice its typical annual performance.

This may sound overly simple but historically it stacks up.

The average annual gain over ten years for Australian dollar gold has been 10.7%. So if the ‘catch up year’ started in mid August, I estimated that Australian dollar gold would reach A$1884 by about August 2013.

Some of my readers thought that was a wild prediction when I published it in August, but as of today, we’re already well on our way to the target.

The fact is that the gold price can’t hover forever when all the forces that drove it up for the last 12 years are still in play.

Consider that the market is as risky as ever, geopolitical risk is still very high, central bank balance sheets are ever expanding, real interest rates are negative, AAA rated bonds are at record lows, mine supply is flat (as is scrap gold supply), soaring Chinese buying, and growing net central bank buying…the list goes on.

That was an explosive mixture for gold to resume its 12 year bull market.

It just needed a spark.

This came in the form of the increasing chance of more money printing from both the Federal Reserve and the European Central Bank.

Well, that could be about to happen. And the most remarkable thing is…

The two most powerful central banks in the world might do it at the same time.

This possibility makes it one of the most exciting weeks of the year for gold and silver investors. Whenever these central banks increase their balance sheets, precious metals prices soar.

On the flipside, it also makes this a risky week. The one certainty in these markets is that nothing is certain. I wrote the following to Diggers and Drillers readers last night:

‘The pressure has been building, but of course, the trigger for the price action has been the expectation of more stimulus from both the Fed and the ECB. The market was asleep in August, as it is a popular time to take a break in the US and Europe. But fund managers and traders are wide awake now that September is here. Their eyes will be closely watching two bits of news this week.

‘Firstly, on Wednesday the German constitutional court rules on the challenge to the European Stability Mechanism. If they don’t rule against it, then gold and silver’s rally will take a big hit because Mario Draghi’s plans for unlimited bond purchases by the ECB will be dead in the water. The decision is binary and the stakes are high.

‘Then on Thursday night, the Fed releases a statement and holds a press conference. Bernanke spelled out last month that more stimulus could be on the table if the data supported it. Last week’s jobs numbers were lousy, so the market is now betting on the Fed announcing a third round of quantitative easing (QE3) to be announced on Thursday.

‘So quite possibly we get a positive announcement from both central banks in a single week.

‘My view is that if the Germans clear the decks for Draghi’s unlimited bond purchases, then we will see the Fed announcing QE3 as well. Both central banks have been building the rhetoric for endless months. And as this chart shows, historically the two central bank balance sheets have grown roughly in tandem.

ECB’s balance sheet and the Fed’s grow together
(figures multiplied by a million)

Click here to enlarge

‘Of course, we could get nothing from either central bank.

‘And we’ve certainly had no shortage of fruitless hints and central bank hype already this year. More of the same would not surprise me.’

Gold Stocks Are Cheap

That makes this week a high risk, high return time for taking a position in precious metals and precious metals stocks. A double whammy from the two central banks will fuel the existing rally, but nothing from either will see a pullback.

Something else that has been good to see in the last month is that prices of some of the best quality gold stocks have actually risen faster than the gold price.

This ‘leverage’ means that with the right gold stock, you can amplify the gains in the gold price. For example, as with my last gold tip, if gold rises 9% then the stock price rises 20%. It’s been a long while since we’ve seen this – and gold stocks are so outrageously CHEAP right now, there is space for them to keep giving investors this kind of leverage to gold for years.

So…not only is gold resuming its bull market, but gold stocks are starting to offer leverage to it too. And with a strong chance of central bank stimulus any day now, I think we may now just be looking at the holy grail of set-ups for gold stock investors.

It has been a long time coming!

But it should be well worth the wait.

Dr. Alex Cowie
Editor, Diggers and Drillers

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Gold Up, but Gold Stocks Up More

By MoneyMorning.com.au

The announcement by the European Central Bank of ‘unlimited bond buying’ has made recent Aussie price action more about the ECB than China. But I wouldn’t expect the ECB announcement to have much of a shelf life.

Breaking down the ECB’s ‘unlimited bond buying plan’ I realised this is just the latest play in a poker game between Germany and the ECB.

The ECB wants to find a way to directly buy Spanish and Italian government bonds so it can prevent a credit and banking crisis. Germany doesn’t want to throw good money after bad until national governments commit to structural economic reforms – and cede economic sovereignty to Germany.

Yes, it would have been much more exciting to talk about the four-year high on the S&P 500 and Europe finally putting a firewall between share markets and the debt crisis. But the entire ECB plan revolves around the idea of ‘conditionality’.

Asking the Impossible

It’s a bureaucratic way of saying that Spain and Italy are only eligible for unlimited ECB bond purchases (through secondary mechanisms) if they agree to austerity conditions imposed by the International Monetary Fund (IMF) and the European Union. What’s more, Spain would have to officially request a bailout.

Spain must redeem around €20 billion in bonds by October. That means it’s likely to request a bailout from the ECB in the next week or so, to reassure markets and prevent short- and long-term bond yields from spiking again. But there’s a small problem.

‘Conditionality’ means that bailout recipients must adhere to the austerity measures imposed by Brussels and Berlin. Politically, this is suicide for an elected politician. That’s why democratically elected politicians in Greece and Italy have been replaced by EU bureaucrats. Spain’s Prime Minister Mariano Rajoy must know that as soon as he formally requests a bailout, his career is over.

The bigger problem is that it’s almost economically impossible for European governments to meet austerity terms. Cuts in spending and the public sector are needed to bring budgets back into balance. But the cuts necessarily reduce the contribution government spending makes to GDP. Lower GDP growth results in lower tax revenues and higher-than-expected deficits.

It’s a cycle of misery that explains high youth unemployment, lower GDP growth, and an inability to reduce government deficits as a percentage of GDP. The only real benefit is political, to the power brokers in the EU, who slowly gain control of Europe’s economic and political life, and lord it over millions of people who face tougher economic times.

The Answer for Europe, A Solution for Investors

Austerity is the wrong word for what Europe needs. What Europe needs is less government, less integration, and more freedom. It’s going in the opposite direction, though. And for financial markets, that means the likelihood of a big credit accident or financial crisis in Europe is as high as ever.

Ultimately, all of the world’s politicians and central bankers know of only one-way out of their troubles: print more money.

I’m troubled by the implications of this for a large cash position, but in the meantime, look for gains in precious metals.

Dan Denning
Editor, Australian Wealth Gameplan

From the Archives…

Outright Money Transactions – Why ‘Free’ Money Costs You More
07-09-2012 – Kris Sayce

Spanish Banks are in BIG Trouble
06-09-2012 – Bengt Saelensminde

With Iron Ore Prices Falling Will Fortescue ‘Break the Buck’?
05-09-2012 – Kris Sayce

Brace Your Portfolio for a Hard Landing in China
04-09-2012 – John Stepek

Australian Resources Boom Curse…or Industrial Renaissance?
03-09-2012 – Nick Hubble

The ECB is Only Fooling the Gullible

GBPUSD remains in uptrend from 1.5490, the fall from 1.6033 is likely consolidation of the uptrend. Range trading between 1.5930 and 1.6033 is possible in a couple of days. Key support is at the upward trend line on 4-hour chart, as long as the trend line support holds, another rise could be expected after consolidation, and next target would be at 1.6100 area. On the downside, a clear break below the trend line support will indicate that the uptrend has completed at 1.6033 already, then the following downward movement could bring price back to 1.5300-1.5400 area.

Daily Forex Forecast

By OilPrice.com

Well, its official – the U.S. government has acknowledged that the U.S. is in the worst drought in over 50 years, since December 1956, when about 58 percent of the contiguous U.S. was in moderate to extreme drought.

According to the National Oceanic and Atmospheric Administration National Climatic Data Center’s “State of the Climate Drought July 2012” report, “Based on the Palmer Drought Index, severe to extreme drought affected about 38 percent of the contiguous United States as of the end of July 2012, an increase of about 5 percent from last month… About 57 percent of the contiguous U.S. fell in the moderate to extreme drought categories (based on the Palmer Drought Index) at the end of July… According to the weekly U.S. Drought Monitor, about 63 percent of the contiguous U.S. (about 53 percent of the U.S. including Alaska, Hawaii, and Puerto Rico) was classified as experiencing moderate to exceptional (D1-D4) drought at the end of July.”

Much business writing on the effects of the drought have focused on its agricultural aspects. To give but one, the hottest, driest summer since 1936 scorching the Midwest have diminished projected corn and soybean crop yields s in the U.S. for a third straight year to their lowest levels in nine years. Accordingly, the price of a bushel of corn has jumped 62 percent since 15 June and soybeans gained 32 percent in the same period.

But as consumers fret about the inevitable rise in food prices to come, the drought is unveiling another, darker threat to the American lifestyle, as it is now threatening U.S. electricity supplies.

Why?

Because virtually all power plants, whether they are nuclear, coal, or natural gas-fired, are completely dependent on water for cooling. Hydroelectric plants require continuous water flow to operate their turbines. Given the drought, many facilities are overheating and utilities are shutting them down or running their plants at lower capacity. Few Americans know (or up to this point have cared) that the country’s power plants account for about half of all the water used in the United States. For every gallon of residential water used in the average U.S. household, five times more is used to provide that home with electricity via hydropower turbines and fossil fuel power plants, roughly 40,000 gallons each month.

Michael Webber, associate director of the Center for International Energy and Environmental Policy at the University of Texas at Austin, is under no such illusions, stating that the summer’s record high  heat and drought have worked together to overtax the nation’s electrical grid, adding that families use more water to power their homes than they use from their tap. Webber said, “In summer you often get a double whammy. People want their air-conditioning and drought gets worse. You have more demand for electricity and less water available to produce it. That is what we are seeing in the Midwest right now, power plants on the edge.”

In July U.S. nuclear-power production hit its lowest seasonal levels in nine years as drought and heat forced Nuclear power plants from Ohio to Vermont to slow output. Nuclear Regulatory Commission spokesman David McIntyre explained, “Heat is the main issue, because if the river is getting warmer the water going into the plant is warmer and makes it harder to cool. If the water gets too warm, you have to dial back production,” McIntyre said. “That’s for reactor safety, and also to regulate the temperature of discharge water, which affects aquatic life.”

Nuclear is the thirstiest power source. According to the National Energy Technology Laboratory (NETL) in Morgantown, West Virginia, the average NPP that generates 12.2 million megawatt hours of electricity requires far more water to cool its turbines than other power plants. NPPs need 2725 liters of water per megawatt hour for cooling. Coal or natural gas plants need, on average, only 1890 and 719 liters respectively to produce the same amount of energy.

And oh, the National Weather Service Climate Prediction Center in its 16 August “U.S. Seasonal Drought Outlook” wrote, “The Drought Outlook valid through the end of November 2012 indicates drought conditions will remain essentially unchanged in large sections of the central Mississippi Valley, the central and southwestern Great Plains, most of the High Plains, the central Rockies, the Great Basin, and parts of the Far West…” The lack of rain and the incessant heat, has also increased the need for irrigation water for farming, meaning increasing competition between the agricultural and power generation sectors for the same shrinking water “pool.”

But, every cloud has a silver lining. California’s Pacific Gas and Electric Co. utility, commonly known as PG&E, that provides natural gas and electricity to most of the northern two-thirds of California, from Bakersfield almost to the Oregon border, is on the case. PG&E has informed its customers that its “Diablo Canyon (nuclear) Power Plant, the largest source of generation in the utility’s service area, is cooled by ocean water, not by rivers that could dry up.”

Never mind the fact that by the time the Diablo Canyon NPP was completed in 1973, engineers discovered that it was several miles away from the Hosgri seismic fault, which had a 7.1 magnitude earthquake on 4 November 1927.

But ocean water as a coolant is not necessarily the answer either.

On 12 August Dominion Resources’ Millstone NPP, situated on Connecticut’s Niantic Bay on Long Island Sound, was forced to shut down one of two reactor units because seawater used to cool down the plant was too warm, averaging 1.7 degrees above the NRC limit of 75 degrees Fahrenheit. The Millstone NPP, which provides half of all power used in Connecticut and 12 percent in New England, was only restarted twelve days later.

The federal government is hardly known for its scaremongering tactics, but it would seem that Mother Nature is forcing Americans to belatedly consider making some lifestyle changes, as the choice seems to be devolving into energy conservation, turning down the air conditioner and digging deeper into the wallet for food costs.

It might also be time for serious national discussion about renewable energy, including wind and solar.

If the sun stops shining, all bets are off.

Source: http://oilprice.com/Energy/Energy-General/The-U.S.-Drought-and-Electricity-Generation.html

By. John C.K. Daly of Oilprice.com

By TraderVox.com

Tradervox.com (Dublin) – The 17-nation currency advanced by most in six months against the US dollar last week after Mario Draghi, the European Central Bank President announced the bond buying program. Euro’s advance against the dollar was supported by poor Labor Department’s data which showed a worsening scenario in the labor market. Reports released last week indicated that Payrolls rose less than forecast as unemployment rate unexpectedly fell. The report sparked speculations that Federal Open Market Committee will add stimulus when they meet this week. The Canadian dollar advanced by most in almost a year as the Swiss franc fell as demand for safe haven currencies declined.

Richard Franulovich highlighted that Draghi’s announcement and the US Payrolls were the main events last week and both indicated to risk-on mood in the market. Franilovich, who is the Senior Currency Strategist in New York at Westpac Banking Corp, added that the Fed and ECB are underwriting risks hence investors are more inclined to sell the dollar and buy risk. The Swiss franc has registered the largest weekly decline against the 17-nation currency since November as demand for safety was significantly reduced by Draghi’s announcement. Axel Merk, who founded the Merk Investments LLC indicated that the European Central Bank action has provided further support for the euro by removing tail risk, hence putting the 17-nation currency on equal footings with other major currencies.

Euro advanced by 1.9 percent against the dollar to close the week at $1.2786 after increasing to a high of $1.2817 on Friday, the strongest level since May 22. It advanced by 1.7 percent against the yen to close the week at 100.25 yen. The euro had advanced to 100.43 on Friday, the strongest since July 14. Further, the shared currency advanced to its strongest since January against the Swiss Franc of 1.2155, registering the biggest weekly gain since November last year.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

London Gold Market Report
from Ben Traynor
BullionVault
Mon 10 Sept, 07:45 EST

THE WHOLESALE gold price drifted lower to $1730 per ounce Monday morning in London, some ten Dollars below Friday’s six-month high.

Stock markets were broadly flat and US Treasuries fell, meantime.

The silver price dipped below $33.50 per ounce – around 20 cents below last week’s close – while other commodities were broadly flat, with the exception of copper, which posted gains.

“Our economists now expect the Fed to ease further at this week’s FOMC meeting, providing gold the catalyst it requires to test fresh highs for this year over the coming weeks,” says a note from Barclays Capital.

“The latest price rally has been driven mainly by hopes that central banks will implement monetary easing measures,” agree analysts at Commerzbank, citing last week’s European Central Bank announcement of unlimited government bond buying as well as the prospect of QE3.

Friday’s trading saw the wholesale-market gold price in Dollars hit its highest level since February, after a disappointing US nonfarm payrolls report led to renewed speculation the Federal Reserve could announce a third round of quantitative easing (QE3) when it makes its latest policy decision this Wednesday.

“[QE3] is likely to spark higher inflation in the medium to long term [and] lead to fears of depreciation of key trading currencies,” says Commerzbank.

“This should benefit gold as a store of value and as an alternative currency.”

Germany’s Constitutional Court is also due to rule this Wednesday on whether or not the Eurozone’s permanenet bailout fund the European Stability Mechanism is compatible with German law.

Germany must “lead or leave” the Eurozone of single currency members, billionaire investor George Soros has told the Financial Times.

“Either throw in your fate with the rest of Europe, take the risk of sinking or swimming together, or leave the Euro,” says Soros.

“Because if you have left, the problems of the Eurozone would get better.”

Berlin has repeatedly insisted that Eurozone governments must adhere to austerity measures in return for financial aid, a policy which Soros describes as “reinforcing the current deflationary stance”.

Over in China – the world’s second-largest gold buying nation last year – imports of gold from Hong Kong rose 12% month-on-month in July to nearly 76 tonnes, the second highest level this year and almost double the figure for July 2011, Hong Kong customs data show.  Hong Kong is a major conduit for Chinese gold bullion imports.

In the same month, China’s domestic gold mining production rose to 31.3 tonnes, according to Ministry of Industry and Information Technology figures published Monday. Chinese gold output for the first seven months of 2012 was 208 tonnes – a gain of just over 7% on the same period last year.

“Slowing real domestic demand in China was the key factor, consistent with the soft activity data in the past few weeks,” says Societe Generale economist Wei Yao.

In New York, the so-called speculative net long position of Comex gold futures and options traders – measured as the difference between the number of open bullish and bearish contracts – rose for the third week running to hit its highest level since February last Tuesday, according to weekly data published by the Commodity Futures Trading Commission.

“The change in the net position was once again driven by moves of a bullish nature,” says Standard Bank commodities strategist Marc Ground, meaning the addition of bullish ‘long’ positions was a bigger factor than the reduction of bearish ‘shorts’.

“The unwinding of short positions was similar to the previous week…a strong addition to longs was also evident, although it was noticeably lower than in the previous week.”

Investment bank UBS today raised its one-month gold price forecast from $1700 per ounce to $1850 per ounce, and its silver price forecast to $37 per ounce, up from $32 per ounce.

One Citi analyst meantime says gold could rise to $2500 per ounce in the first quarter of next year, the New York Post reports.

In South Africa meantime, some 15,000 gold mining workers – a third of the workforce – are on strike at the KDC West mine, operated by the world’s fourth-biggest gold producer Gold Fields. The strike comes less than a week after Gold Fields resolved a dispute at its KDC East mine, which involved 12,000 workers.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben writes and presents BullionVault’s weekly gold market summary on YouTube and can be found on Google+

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.