Month: September 2012

By MoneyMorning.com.au

In his essays On The Principles Of Population, the English scholar Thomas Malthus argued that the earth’s resources are limited and cannot support unlimited population growth. ‘The power of population is indefinitely greater than the power in the earth to produce subsistence for man’, he said.

In many ways “peak oil” theory is an extension of this notion. There is a finite amount of oil in the world, runs the theory (one estimate puts that number at 75 trillion barrels).

At a certain stage, the point of maximum production will be reached. Thereafter production levels will decline.

The US reached its peak in 1970; the rest of world, it seems, in May 2005 at 74 million barrels per day – though this is subject to a lot of debate.

But what about ‘peak gold‘? Does the Malthusian argument extend to gold?

Are We Really Facing ‘Peak Gold’?

Until last year, it seemed that world gold production had peaked in 2001 at just 2,600 tonnes a year. Despite the rising gold price, by 2008 that number had slid to 2,400 tonnes.

However, we have seen a rally, and 2011 saw a record at 2,818 tonnes. Forecasters seem to concur that will we see something like 2,900 tonnes produced in 2012.

However, annual global demand is considerably more than that. It was about 3,500 tonnes in 2000 and rose to 4,486 tonnes by 2011.

In other words there is a deficit. There has been a deficit since the mid-1970s. This has risen from below 1,000 tonnes in 2000 to 1,668 tonnes last year.

The cumulative effect of that deficit is pretty striking. Chartist and all-round data gobbler, Nick Laird of sharelynx.com, who has produced the chart below, says: ‘Note that since 1950, 133,000 tonnes (over 80% of the gold ever found) has gone into demand with 115,000 tonnes of this having come from production.

This leaves a shortfall of 18,000 tonnes, which has come from central bank sales, stockpiles and scrap’.

That 18,000-tonne shortfall represents about seven years’ worth of total production. Where, I can’t help wondering, given that central banks are now net buyers, will the gold to address future shortfalls come from?

It all points to higher prices – prices at which more people are happy to sell.

Click to enlarge

Miners Have to Work Harder to Find Gold

However, the 2011 production record has come at a cost. Exploration expenditure has gone from $1bn in 2000, to $6bn in 2010, according to data from the Metals Economics Group.

I’ve read other arguments that suggest the figure is closer to $8bn.

And despite this increased expenditure, the number of major discoveries – for major, read a deposit of more than a million ounces – being made is actually falling, as the table below from Minex Consulting shows.

In 1996 there were about 30. In 2002, around five (with gold as the primary metal). By 2006 that number bounced back to 20. 2010 saw about ten. It seems that number will have fallen in 2011, but the data is still incomplete.

Click to enlarge

The exploration sector needs to make discoveries to justify its existence. Part of the reason funding dried up in late 2011 and 2012 must be that so few discoveries were made. There was nothing to get investors excited.

In fact, failure makes them angry. Shareholders are rather more tolerant of their chief executives lording it up at the Savoy if they’ve just made a million ounce discovery.

As well as the number of discoveries declining, it appears the average size of major deposit discoveries is declining too.

In 1970 to 1979, the average was 5.9 million ounces. That declined to 5.6 million ounces in the next decade and to 5.1 million ounces in the decade after that.

Between 2000 and 2009, the average size of a major gold discovery fell to 4.4 million ounces.

The average grade of discovered gold is also declining – in other words, there is less gold in the rock, which means it is more difficult and more expensive to extract.

In short, we are seeing declines in both size and quality. That’s similar to the problem many oil producers face of having to go into more challenging areas, be it geologically, geographically or politically, to get their oil. It’s a reflection of ‘peak oil’ in other words.

The average time from drilling the discovery hole to declaring the maiden resource is 3.7 years. From discovery to an actual mine start-up, takes an average of ten years.

The lack of major recent discoveries points to a further shortfall in production five or ten years down the road. It also suggests that the gap between demand and production will further increase.

So leaving aside the analysis of the subtext of central bank pronouncements, the sheer numbers alone point to higher gold prices ahead.

Dominic Frisby
Contributing Writer, Money Morning

Publisher’s Note: This article originally appeared in MoneyWeek

From the Archives…

In Defence and Praise of ‘Cranks and Crazies’
21-09-2012 – Kris Sayce

We Buy Gold Because We Don’t Trust Them Not to Meddle
20-09-2012 – Kris Sayce

Why Share Trading is ‘Mental’
19-09-2012 – Murray Dawes

A Bear Market Where You Least Expect
18-09-2012 – Greg Canavan

Questionable Easing 3
17-09-2012 – Dr. Alex Cowie

Is the World Running Short of Gold?

USDCHF continues its upward movement from 0.9239, and the rise extends to as high as 0.9417. Further rise is still possible, and next target would be at 0.9500 area. However, the rise is treated as consolidation of the downtrend from 0.9971 (Jul 24 high), as long as 0.9500 level holds, the downtrend could be expected to resume, and another fall towards 0.9000 is still possible, only break above 0.9500 could signal completion of the downtrend.

Daily Forex Forecast

By The Sizemore Letter

Listen to Charles Sizemore and InvestorPlace’s Jeff Reeves continue their bull vs. bear debate in this audio interview:

If you cannot see the embedded audio player, please click here.  This interview first appeared on InvestorPlace

Related posts:

• Charles Sizemore on Straight Talk About Money
• Charles Sizemore Discusses Bernanke’s “Big Bazooka” on Straight Talk Radio
• 3 Reasons to Expect a 4th Quarter Rally

By Central Bank News
    The National Bank of Georgia kept its main policy rate, the refinancing rate, unchanged at 5.75 percent as inflation is expected to reach the bank’s target in the medium term and the economy’s output gap is insignificant.
    Georgia’s central bank said Gross Domestic Product growth in the second quarter was 8.2 percent, which the bank described as “quite high.”
    The central bank has cut its policy rate four times this year for a total reduction of 100 basis points.
    Inflation in Georgian fell to an annual rate of minus 0.4 percent in August for an annual average of 0.1 percent, significantly below the bank’s target of 6.0 percent.
    “According to existing forecasts in the coming months inflation will start to moderate and growth will approach its target value in the second half of the next year,” the central bank said in a statement.
    Georgia’s inflation rate fell to 2.0 percent in 2011 from 11.2 percent in 2010.
    It said credit growth had decelerated in the past two months, which is typical ahead of elections, but credit activity is expected to increase in coming months given high liquidity in the banking sector.
   
     www.CentralBankNews.info

By The Sizemore Letter

September 18, 2012 was a noteworthy day for students of history.

King Juan Carlos of Spain stepped into the political fray for the first time in more than 30 years, calling on all Spaniards to stick together during the hard times in front of them and to avoid chasing unrealistic pipedreams (those who can read Spanish can view his letter here).

Advising Spaniards not to tilt at windmills since 1975.

The King’s comments were his most direct involvement in Spanish politics since he intervened in 1981 to prevent a mad, machine-gun-toting colonel from taking over the government.

Today, no one is walking into Spain’s parliament building and spraying the ceiling with bullets, but the King’s letter is telling.  Spain—and much of the rest of peripheral Europe—is mired in a cycle of debt-necessitated austerity and economic contraction that has created the worst crisis in decades.  Europe is a mess.

For all of the optimism surrounding Mario Draghi’s “Big Bazooka” moves to stabilize the Eurozone through outright monetary transactions, the crisis still has a long way to go before it is resolved.

And I should be clear—it may never get resolved.

Depending on the political decisions made over the next 3 – 6 months, the Eurozone could emerge from the crisis as a stronger, more durable union.  Or, the entire European project—which has been in the works for sixty years now—could come apart at the seams.

With all of this as an intro, you might be surprised by what I say next: I’m bullish on European equities and maintain an overweight position in them in most of my client portfolios.

Let’s look at some of the bullish arguments:

1. The ECB doing “whatever it takes” via unprecedented monetary stimulus  – All investors have heard the standard advice: Don’t fight the Fed.   I would argue that, for the first time, the same can be said of the European Central Bank.  Mario Draghi broke long-standing taboos and asserted his authority over the German Bundesbank by launching his program of potentially unlimited outright monetary transactions over the objection of Bundesbank President Jens Weidmann.  Draghi has a bigger bankroll than you, and he’s shown that he’s not afraid to use it, even if it means stretching his constitutional mandate.  This does not by any means suggest that Draghi can create the conditions for a durable bull market; but it does mean that he can stoke the flames of a multi-month rally.
2. The bailout mechanisms will clear up the uncertainty weighing on the market – Spain has yet to formally request aid from the ECB or the bailout institutions; yet rumors that prime minster Mariano Rajoy was getting close to doing so was enough to send Spanish stock prices soaring last week.  According to leaked news from the parties involved, EU and Spanish officials are working behind the scenes to set out the conditions for a Spanish bailout that Rajoy would accept.  Meanwhile, Der Spiegel reports that talks are underway to allow the Eurozone’s primary bailout fund—the European Stability Mechanism—to be leveraged to 2 trillion Euros if need be.  Suffice it to say, a lot of monetary firepower is being thrown at the Eurozone, and a fair bit of it can be expected to find its way into the Eurozone equity markets.
3. European stocks are the cheapest in the world – Finally—and most importantly—European stocks are dirt cheap relative to their world peers.  To be sure, some sort of “Europe discount” is appropriate given the macro risk and the unappealing growth prospects for years to come.  But at some point, the stocks are simply too cheap to ignore.   By FT estimates, the French, German and Spanish markets trade for just 14.1, 12.7, and 13.4 times earnings, respectively.  Depressed earnings, I might add.  Each also yields between 3 and 5 percent in dividends.  Compare this to the United States,  which trades for 16.1 times cyclically-high earnings and yields a pitiful 2.1%.  Are European stocks as attractively priced as they were two months ago?  Of course not.  But I still expect them to be among the best performing in the world over the next 6-12 months.

It’s only fair to mention the other side of the coin.  If the bond market loses faith in Mr. Draghi or infighting among Europe’s politicians prevent them from making the institutional reforms needed to make the bailouts credible, then all bets are off.  (Just today it was announced that the German, Finnish and Dutch finance ministers had announced opposition to aspects of the bank bailout….sigh). In the event that the reforms truly break down, investors will want to not only exit their European equity positions but exit all risky assets, as this would mean a return to the risk-on / risk-off volatility we’ve had to endure for much of the past two years.

SUBSCRIBE to Sizemore Insights via e-mail today.

Related posts:

• Europe Reaching the Boiling Point: How to Invest
• Trading Strategies: Playing Europe in the Near Term
• August 2012 Covestor Manager Commentary: It’s All About Spain

London Gold Market Report
from Adrian Ash
BullionVault
Weds 26 Sept, 08:00 EST

WHOLESALE gold prices in US Dollars dipped beneath $1760 per ounce for the 3rd time this week in London on Wednesday morning, gaining against the Euro and Sterling as those currencies fell faster and rising back towards last week’s new all-time high versus the Swiss Franc.

World stock markets extended Tuesday’s late plunge in US equities, knocking 2.4% off the French CAC40 index as the Euro dropped to a 2-week low beneath $1.2850.

After anti-austerity protesters clashed last night with police in Madrid, a general strike in Greece brought the country “to a standstill” according to BBC reports, with tens of thousands of people gathered outside parliament in Athens.

Commodity prices fell, with crude oil dropping to a 7-week low.

Silver bullion held below $34.00 per ounce, trading just above Tuesday’s 8-session low.

“It’s bullish when gold goes up in other currencies than the Dollar,” Bloomberg today quotes Mitsubishi Corporation’s precious metals strategist Matthew Turner, “because it means it’s a fundamental story rather than a currency issue.

“We’ve been waiting for QE3 in gold for over a year now and now it’s happened.”

US central banker Charles Plosser, president of the Philadelphia Federal Reserve, warned Tuesday that the Fed’s new monthly purchases of $40 billion in mortgage debt are “unlikely to see much benefit to growth or employment.”

“Plosser threw a wet rag on hopes that the Fed’s quantitative easing would stimulate the US economy,” says Marc Ground at Standard Bank in London.

“[But the] accommodative monetary policy stance from the Fed will support precious metals, particularly gold and silver, well into 2013.”

Analysts at Bank of America-Merrill Lynch also “remain secular bulls on gold,” says technical strategist Stephen Suttmeier, adding that “The breakout above the year-long downtrend line completes the correction within the longer-term uptrend.

“Gold prices point to a stronger rally to $2050-2300 and up to $3000 longer-term.”

Last week, Suttmeier’s BAML colleague MacNeil Curry – head of foreign-exchange technical strategy – told CNBC that he sees gold hitting $3000 to $5000 an ounce, but “not in the next few months.”

On the demand side, “Physical demand still remains fairly limp presently,” says today’s note from Swiss refiner and financiers MKS’s Australian dealers, “and there is certainly an increase in scrap this month which is skewing physical flows to the downside.

“The one respite is that typically Q4 shows a bounce back in physical demand following summer holidays [as the] Chinese and Indian gift giving and festival season begins.”

Gold prices in India – where mid-November’s Diwali festival will mark the typical gold buying peak for the world’s #1 consumers – today edged higher by 0.3%, the first such rise in a week according to Bloomberg but only 2.5% off this month’s new record highs.

Central banks “are likely to continue to buy gold for the remainder of this year,” writes Eugen Weinberg, head of commodity research at Commerzbank in Frankfurt today, “thereby stripping supply from the market and contributing to climbing gold prices.”

Gold is “currently also finding support from concerns about supply in South Africa,” says Weinberg of the world’s former #1 producer, still sitting on the biggest underground reserves.

“Strikes [by miners] are now concentrated on the gold industry, while the platinum industry has recently calmed down again.”

The world’s 4th largest gold mining firm, Gold Fields, said Tuesday that workers remained on illegal strike at two of its South African mines, “ignored the agreement reached Friday night,” according to a spokesman.

World No.3 listed miner AngloGold Ashanti said Wednesday morning that illegal strike action at its Kopanang mine had spead to involves “most” of South African workforce.

Holding the world’s second-largest unmined gold reserves, however, Russia could accept tenders to work Siberia’s Sukhoi Log, the country’s biggest untapped gold deposits – “in the near future” said deputy prime minister Arkady Dvorkovich, speaking at Reuters Russia Investment Summit in Moscow Tuesday.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(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.

By TraderVox.com

Tradervox.com (Dublin) – The sterling pound increased towards one-year high against the greenback after UK industry report showed that mortgage approval increased last month. Speculation is high that the UK economy is improving hence pushing the pound high against the dollar, euro and yen. The UK currency increased against the Japanese currency as draft guidelines for the European Stability Mechanism showed that the European Central Bank will invest in several assets. Speculations that the debt crisis will affect the UK economy have declined significantly.

Jeremy Stretch, a London-based Foreign-Exchange Strategist at the Canadian Imperial Bank of Commerce, noted that the pound rose as sentiment improved regarding the European Stability Mechanism’s ability to invest is a wide range of assets. He also noted that the UK housing data contributed to the strengthening pound as it was marginally better than the previous readings. According to British Bankers Association report, mortgage approvals in UK increased to 30,533 in August, registering the largest amount of mortgage approvals since April. The figure rose from 28,750 registered in July. Further, signals of UK economy improvement came from the Office of National Statistics report, which showed that the budget deficit ex-government support for banks was at 14.4 billion pounds lower than the market expectation of 15 billion pounds.

The Bank of England said that the financial institutions in the country may be able to borrow an initial amount of 61 billion pound through its new Funding for Lending Scheme. Under this scheme, the BOE intends to avail funds to households and companies as a way to fend off contagion from the debt-stricken euro zone.

The UK currency appreciated by 0.2 percent against the US dollar to exchange at $1.6241 at the close of trading session in London yesterday. The currency had climbed to a high of $1.6309 on September 21, which is the highest level since August 31, last year. The pound rose to 79.37 pence against the euro, its strongest since September 7, before retreating to 79.76.

Disclaimer
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Article by AlgosysFx Forex Trading Solutions

Encouraging signs of improvements in the world’s largest economy are presumed to strengthen the US dollar opposite its safe haven counterpart in the exchanges today. Yesterday, reports indicated that consumer confidence rose to a seven-month high, factory conditions in the central Atlantic expanded, and house prices edged up. Today, the New Home Sales report is once again presumed to underscore that the US housing market has finally turned a corner.

Going by a report from the Conference Board, rising stock prices and a brighter outlook for jobs have incited more optimism from American consumers. The Consumer Confidence index jumped from 61.3 points to 71.3 points in September, its strongest reading since February this year. The outcome exceeded estimates of a modest rise to a grade of 63.1, providing improved prospects for consumer spending which accounts for about 70 percent of the US economy. Better expectations for hiring largely drove the increase, with the percentage of respondents anticipating more jobs to become available in the next six months climbing to its highest level since February. Those who expect incomes to rise likewise increased to its highest level this year.

Stabilization in housing is also playing a key role in the improvement in confidence. Average home prices in July rose 1.2 percent from a year earlier, the largest 12-month increase since August 2010, according to S&P/Case-Shiller data released yesterday. The Federal Housing Finance Agency’s House Price Index also a 0.2 percent inclined in July after 0.6 percent increases in the previous two months. Such trends solidify hopes that after five years of decline, house prices have bottomed out. According to economists, the gain supports the view that even with the broader economic recovery struggling, the housing recovery is sustainable. Such reports follow recent data suggesting home re-sales and groundbreaking on new properties rose in August while business sentiment among  homebuilders hit a more than six-year high this month.

Further optimism for the real estate market is presumed to be delivered by a projected increase in New Home Sales in August. The annualized number of single-family homes sold last month is said to have mounted from 372,000 to 381,000, potentially its highest level in more than two years. Low mortgage rates have likely stimulated buyers to finally enter the housing market. With consumer confidence improving, sales are likely to see continued gains. Amid the foregoing positive developments from the US economy, the Greenback is believed to rise against its fellow safe haven Swissie. Hence, a long position is recommended today.

For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx

By OilPrice.com

As Japan and France move away from nuclear energy, is it the endgame for nuclear proponents?

As the world slouches into the 21st century, one of the global economic realities is that more and more developing nations, much less the “First World,” are competing for fossil fuel resources whose production is rising more slowly than demand.

Complicating the picture are the booming economies of two BRIC nations, India and China, a development that ensures that developed nations will be in increasing competition for global supplies of oil, natural gas and coal, whose production is struggling to keep with increasing demand.

An alternative relentlessly pushed by Western corporate interests is nuclear power, whose proponents never cease to remind their potential audience that nuclear power plants (NPPs), unlike those fired by coal or oil, emit no greenhouse gases, no small consideration in the world community worried about global warming.

But the global nuclear power industry has three strikes against it – cost, catastrophes, whether man-made (Three Mile Island, Chernobyl) or natural (Fukushima Daiichi) and the not inconsiderable problem of disposing of nuclear waste generated by NPPs. Despite civilian nuclear programs dating back to the early 1960s, no country has yet developed an environmentally safe means of disposing of NPP’s nuclear by products, and these three issues are forcing a slow but significant worldwide rethink on the viability of nuclear electrical production.

Needless to say, the well-entrenched world nuclear power generation, with trillions of dollars invested and potentially billions more in the form of new NPP contracts, is fighting a furious rear-guard action, but the ultimate outcome of the titanic struggle is anything but clear, given a number of recent events.

The United States has 104 NPPs in operation, France – 58, Japan’s (currently offline)  54, Russia 32, South Korea 20, India 19, Canada 18, Germany 17, China 11, Taiwan six and Pakistan two, while nations with nuclear power reactors under construction include China with 23, Russia – nine, South Korea – six, India four and Taiwan two.

On 14 September, bowing to public opposition, Japan’s government joined Germany and Switzerland in turning away from nuclear power after the March 2011 earthquake unleashed a tsunami that destroyed Tokyo Electric Power Co.’s six-reactor Fukushima Daiichi NPP complex. The decision represents a major about-face by the Japanese government of Prime Minister Yoshihiko Noda, which before Fukushima stated that the nation’s energy policy would increase the country’s share of atomic energy to more than half of the country’s electricity generation. Noda’s government intended to ramp up by 300 percent the country’s share of renewable power to 30 percent of its energy mix. Noda’s decision earlier this year to restart two NPPs to avoid potential summer power outages, flying in the face of public opinion, energized anti-nuclear protests.

Noda’s government’s decision to phase out the country’s NPPs by both refusing to extend nuclear plant operating licenses beyond 40 years and committing to building no new ones provoked an immediate and predictable backlash from Japan’s powerful nuclear energy lobby, which argued that the short sighted decision would boost electricity prices, making industry uncompetitive and complicating efforts to reduce greenhouse gas emissions.

Nearly fifty years ago, when the U.S. led the way in deploying civilian nuclear electricity NPPS, proponents excitedly maintained that soon electricity would be “too cheap to measure.”

But, while this advertising slogan never panned out, a second nuclear power reality overlooked by proponents of its centrality to a nation’s power generation base is the uncomfortable fact that it was in fact born from the stupendously expensive U.S. “Manhattan Project,” which produced the nuclear weapons dropped on Japan in august 1945, which both ended World War Two and inaugurated the Cold War. The nexus between civilian electrical power generation and weaponry have existed uneasily since then, as evidenced by the recent international campaign against Iran.

So, what to make of Japan’s tepid decision to downsize its nuclear energy commitment? Thoughtful analysts might note that Europe’s leading technological powerhouses, Germany and Japan, have apparently decided to pursue energy alternatives to nuclear while France, Europe’s leading user of nuclear energy, is also rethinking its position.

Do Berlin and Tokyo know something that other nations do not? Whatever occurs, expect a vigorous rear-guard action by the global nuclear power industry, as it attempts to preserve its multi-billion dollar industry, starting with them suddenly joining the climate change bandwagon by emphasizing that NPPs generate zero greenhouse gases.

Which, of course, is why former Fukushima residents outside the NPP’s 12 mile exclusion zone breathe so much more easily.

Source: http://oilprice.com/Alternative-Energy/Nuclear-Power/Japan-Steps-Away-from-Nuclear-Power.html

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

Source: ForexYard

The euro remained bearish throughout the day yesterday, as ongoing concerns regarding the debt situations in Greece and Spain weighed down on investor confidence in the euro-zone economic recovery. Today, the main piece of economic news is likely to be the US New Home Sales figure, set to be released at 14:00 GMT. Analysts are forecasting that the indicator will come in at 381K, which if true, would be an improvement over last month’s 372K. Any better than expected news could result in the
euro falling further against the USD.

Economic News

USD – Home Sales Data Could Help Boost Dollar

The US dollar saw gains against most higher-yielding currencies yesterday, as investor confidence in the euro-zone economic recovery declined which boosted the safe-haven USD. That being said, against the safe-haven yen, the dollar remained bearish. After reaching as high as 0.9383 during early morning trading, the USD/CHF saw a slight downward correction and spent most of the European session trading around the 0.9370 level. The USD/JPY spent most of the day trading around the 77.75 level, slightly above a recent ten-day low.

Today, dollar traders will want to keep an eye on the US New Home Sales figure, scheduled to be released at 14:00 GMT. A better than expected home sales figure in August gave the greenback a boost against several of its main currency rivals. With analysts predicting today’s news to come in at 381K, higher than last month’s, the USD may be able to recoup some of its recent losses against the yen. Tomorrow, traders will not want to forget to pay attention to the US Pending Home Sales figure to get a better gauge of the how the US retail sector is performing.

EUR – Debt Worries Lead to Further Euro Losses

The euro took additional losses against its main currency rivals yesterday, as concerns regarding Greece’s ability to meet the commitments of its recent bailout agreement and speculations that Spain will soon seek a bailout of its own weighed down on risk appetite. The EUR/USD reversed modest gains it made during Asian trading, and spent most of the day trading around the 1.2900 level. Against the Japanese yen, the common-currency also saw downward movement following a brief spike during overnight trading. The EUR/JPY spent most of the day trading around 100.30.

Today, the main piece of European news is likely to be a German ten-year bond auction. While Germany is the euro-zone’s strongest economy, and German bonds are often thought of as one of the safest investments in the EU, recent data suggests that the country is beginning to feel the effects of the debt-crisis. Should there be any signs of a decrease in demand for German debt, the euro could extend its recent bearish trend.

Gold – Gold Fails to Recoup Earlier Losses

Gold spent most of the day yesterday range trading, as renewed fears regarding the debt situations in Greece and Spain, combined with disappointing German news earlier in the week, resulted in risk aversion in the marketplace. The precious metal spent most of the day trading around the $1765 an ounce level, well below the 6 ½ month high of $1787 it hit last week.

Today, gold traders will want to continue monitoring developments out of the euro-zone, particularly with regards to the situation in Spain. Most analysts agree that Spain will soon have to request a bailout package from the ECB. When it does, investors may shift their funds to riskier assets, which could help gold recoup some of this week’s losses.

Crude Oil – US Inventories Figure Set to Impact Oil

After seeing a modest boost during overnight trading yesterday, crude oil was able to largely maintain its gains throughout the European session. The commodity spent most of the day trading around the $92.40 a barrel level, well above its low of $91.05 from earlier in the week.

Today, oil traders will want to pay close attention to the US Crude Oil Inventories figure, set to be released at 14:30 GMT. The indicator has come in significantly higher than expected for the last two weeks, which was taken as a sign that demand in the US has gone down and resulted in the price of oil falling. If today’s news once again comes in above the forecasted level, crude may give back its recent gains.

Technical News

EUR/USD

A bearish cross on the weekly chart’s Slow Stochastic indicates that this pair may see a downward correction in the near future. Additionally, the Williams Percent Range on the same chart has crossed over into overbought territory. Opening short positions may be the wise choice for this pair.

GBP/USD

The daily chart’s Relative Strength Index has crossed into the overbought zone, signaling a possible downward correction in the near future. This theory is supported by the weekly chart’s Williams Percent Range, which is currently above the -20 level. Traders may want to open short positions for this pair.

USD/JPY

While a bearish cross has formed on the daily chart’s MACD/OsMA, most other technical indicators place this pair in neutral territory. Traders may want to take a wait and see approach for this pair, as a clearer picture is likely to present itself in the near future.

USD/CHF

The Bollinger Bands on the weekly chart are narrowing, indicating that this pair could see a price shift in the near future. Furthermore, the Williams Percent Range on the same chart has crossed into oversold territory, signaling that the price shift could be upward. Opening long positions may be the wise choice for this pair.

The Wild Card

DAX 30

The daily chart’s MACD/OsMA has formed a bearish cross, signaling that downward movement could occur in the near future. Furthermore, the Williams Percent Range on the same chart has crossed into overbought territory. This may be a good time for forex traders to open short positions ahead of a downward correction.

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.