Month: September 2010

By Greg Holden – The euro has been regaining its composure against its smaller North American counterpart due to recently boosted risk appetite. The Canadian dollar, to the contrary, has been under pressure lately due to a decline in crude oil futures as well as concerns that growth in the Canadian economy may be stagnating. As a result, we can see the value of the EUR gaining against the loonie in a consolidating wedge formation.

– We can see on the daily chart below that the price has indeed been trading within a wedge formation which began in June. The price is currently finding support near 1.3400.

– The upper barrier of this consolidation point also rests at the 38.2% Fibonacci retracement line. The consolidation price target appears to be 1.3700 and there is nothing in our technical indicators which suggests this consolidation will not be met.

– We can also see an ascending pattern on both the Stochastic (slow) and MACD/OsMA, which support the continued upward movement in the direction of this consolidation level.

EUR/CAD – Daily Chart

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 Dan Eduard – Upbeat US data gave riskier currencies a rare boost yesterday, as investor confidence in the global economic recovery went up. A batch of new data today will largely determine whether the currencies like the euro and UK pound will be able to extend their gains.

Here is a roundup of the day’s main news events:

11:45 GMT: EUR Minimum Bid Rate

The Minimum Bid Rate is the euro zone’s short term interest rate for refinancing operations. Interest rates are considered one of the more crucial indicators in any economy, and as such, continuously lead to market volatility. While a change from the existing 1.00% rate is not predicted, traders will want to also pay attention to any surprises from the ECB press conference, scheduled for 45 minutes after the rate is announced.

Should the ECB voice any optimism regarding the pace of the euro zone economic recovery, riskier currencies like the euro and sterling will likely extend their bullish trends throughout the day. At the same time, if the ECB voices pessimism regarding Europe’s pace of recovery, safe haven currencies like the USD could make a comeback.

12:30 GMT: USD Unemployment Claims

The US weekly Unemployment Claims figure measures the number of people who filed for first-time unemployment insurance over the last 7 days. With the employment situation at the forefront of the US economic recovery, this figure has consistently led to market volatility.

Last week’s unemployment figure came in slightly below expectations, resulting in a boost for riskier currencies. This week, analysts are predicting a slight increase in unemployment. If true, traders can expect the safe haven currencies to stage a slight comeback in afternoon trading. At the same time, this figure is notoriously difficult to predict. Anything below the forecasted number may lead to risk taking, and a boost for the euro.

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.

Source: ForexYard

Currencies like the euro and UK pound muted gains made yesterday as investors appear to be waiting on a batch of economic data set to be released later today. Signs that the global economic recovery is speeding up may be reinforced today as the UK, euro zone and US are all forecasted to release significant news. Traders can expect major market volatility today, and excellent opportunities to increase profits.

Economic News

USD – After Dramatic Losses Yesterday, USD Awaits Fresh Unemployment Data

Following better than expected US manufacturing data yesterday, risk taking returned to the marketplace and caused the greenback to slide against the majority of its currency rivals. Both EUR/USD and GBP/USD shot up over 100 pips.

In overnight trading, the USD pared most of its losses, trading relatively steady ahead of a volatile news session today. Currently, the EUR/USD is trading around the 1.2795 level, down about 15 pips from last night. Similarly, GBP/USD is down around 18 pips and is trading around 1.5440.

Traders will want to pay particular attention to the latest US unemployment claims figure today, as well as the Pending Home Sales report, set to be released at 12:30 and 14:00 GMT respectively. While unemployment is not forecasted to change significantly from last week, the figure is notoriously difficult to predict.

Should a better than expected figure come in, investor confidence will likely be boosted, leading to further losses for the buck. Predictions for the Pending Home Sales number are for a marked improvement over last monthly period. If true, traders can expect the USD to continue to slide.

Traders should remember that any trend in the market today is likely to dramatically change tomorrow with the release of the latest US Non-Farm Payrolls (NFP) figure. The figure consistently leads to market volatility and should be carefully paid attention to.

EUR – Euro Set to Extend Gains Today

Following a dramatic return to risk taking in the market yesterday, the euro saw significant gains against its major counterparts throughout the day. In addition to the dollar, the euro saw bullish movement against both the yen and Swiss franc.

The EUR/JPY jumped some 130 pips yesterday before staging a mild downward correction in overnight trading. Currently the pair stands at 107.60. The EUR/CHF moved up over 100 pips, and is currently holding onto its gains. The pair has been trading around the 1.3015 price level throughout the night.

Investors are eagerly awaiting the news from the ECB press conference, scheduled to take place at 12:30 GMT. While an increase in euro zone interest rates are unlikely, the press conference will provide an opportunity for the ECB to give any predictions regarding the current state of the European economic recovery. Any positive sentiment will likely help the euro extend its recent gains in afternoon trading.

In addition, euro pairs will likely be affected by the latest US Unemployment Claims figure. Better than expected unemployment data should lead to an increase in risk taking and boost the euro against its main currency rivals.

JPY – Yen Tumbles as Risk Taking Returns to Marketplace

The yen took dramatic losses yesterday against many of its counterparts as investor confidence in the global economic recovery boosted riskier assets. The GBP/JPY moved up some 100 pips throughout the day, and is currently trading around 129.95. Against the euro, the Japanese currency was able to recoup some of its earlier losses in overnight trading. The EUR/JPY has fallen about 50 pips in the last few hours, and is currently trading around the 107.60 level.

Today, should positive market news continues to be released, the yen will likely see further losses. Traders will want to pay attention to the ECB press conference, as well as the US Unemployment Claims and Pending Home Sales figures. At the same time, these events could very well disappoint, in which case a return to risk aversion may occur in afternoon trading. In that case, the safe haven yen could see a fairly profitable day.

Crude Oil – Crude Oil Prices Rise despite US Inventories Report

An increase in US crude oil inventories did not stop prices from increasing dramatically yesterday. Typically speaking, larger inventories mean that there is decreased demand in the US which causes prices to drop. This was not the case yesterday, as the weakened dollar helped boost commodity prices, including oil. Crude prices jumped over $2, and currently stand at $73.82 a barrel.

Today, crude oil prices will largely be based on whether risk taking persists in the marketplace. Should positive news from the euro zone and US be released, the greenback is likely to remain low against its main currency rivals. In this case, international demand for oil will increase, driving up prices. At the same time, should risk aversion return to the marketplace, crude oil may drop in afternoon trading.

Technical News

EUR/USD

The Bollinger Bands on the hourly chart appear to be tightening in anticipation of another consolidation point, which will likely precede another sharp movement. As a result, many of the technical indicators on this pair appear to be floating in neutral territory, the exception begin the weekly RSI which has the pair just entering the over-bought region. It appears this pair is expecting volatility which explains the neutrality of most indicators. However, the weekly chart’s RSI does suggest long-term downward pressure which makes short positions appear more favorable.

GBP/USD

The weekly chart’s RSI has the price of this pair floating in the over-bought territory since 3 weeks ago, suggesting a growing level of downward pressure. The recent bearish cross on the weekly chart’s Stochastic (slow) and subsequent downward movement on the oscillator also support this notion. Going short may be preferable today.

USD/JPY

This pair has broken through its 15-year low mark of 85.00 and currently sits about 80 pips lower. We would expect to see indicators pointing towards an upward correction and this is indeed the case, but only on the weekly chart. The weekly RSI has the price in the over-sold territory, but there are few other indicators to support an upward correction. It appears as if the larger picture of this pair is for a continuation of the downtrend.

USD/CHF

The price of this pair appears to be floating in the over-sold region on the 4-hour, daily and weekly RSI, suggesting strong upward pressure. Recent bullish crosses on the 4-hour and weekly Stochastic (slow) support this notion. Going long with tight stops appears to be the best strategy for the day.

The Wild Card

Gold

The price of this commodity appears to have pushed it into the over-bought region of the daily RSI, but has recently dropped a bit lower than the over-bought region’s lower border. We are now seeing the price beginning to correct back downwards. A bearish cross is also forming imminently on the weekly Stochastic (slow), suggesting that now may be a great entry point for forex traders interested in capturing fast profits before the weekend.

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 eToro – Strong data in Asia, especially China and India lead investors back into riskier assets pushing the Euro above 1.28. The rally is creating a technical breakout, which could gain momentum if the EUR/USD pushes above 1.3000.

Click here to read the full daily Review

Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

GBPUSD may be forming a cycle bottom at 1.5326 level on 4-hour chart. Key resistance is at 1.5597, a break above this level will confirm the cycle bottom and indicate that the fall from 1.5997 has completed at 1.5326 already, then the following uptrend could bring price back 1.5700-1.5800 area. However, as long as the pair stays below the downtrend line on 4-hour chart, one more fall to 1.5200 is still possible, and a breakdown below 1.5326 could signal resumption of downtrend.

Daily Forex Analysis

By GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

USD

The rotation from the dollar into the other safe-havens continued as uncertainty on the economic outlook persists following several data releases and the latest FOMC minutes while the dollar performance was mixed against the rest of the G10. Equities closed flat and Treasury yields and old prices were lower at the time of writing. EURUSD traded 1.2625-1.2743, USDJPY 83.83-84.67. The FOMC minutes from August 10 more downside risk to the recovery than before, which most investors had expected, and saw the MBS policy change as an effort to avoid passive tightening rather than a move toward easing. Although the minutes backed away from earlier deflation fears, the overall tone was dovish and cautious as, “members generally saw both employment and inflation as likely to fall short of levels consistent with the [Fed’s] dual mandate….” Prior to the minutes, the latest data was modestly positive. Conference Board consumer confidence rose above expectations in August and most of the improvement came from the expectations component. The S&P/Case-Shiller Index y/y figure increased more than anticipated but the index does lag changes in price trends. The Chicago and Milwaukee regional manufacturing indexes weakened though they remained above 50 and investor focus now shifts to the August ISM Manufacturing release.

EUR

Among Eurozone data releases, German unemployment fell by 17k, slightly less than expected and the unemployment rate was unchanged at 7.6%. Eurozone CPI was weaker at 1.6% and unemployment steady 10.0%. Several final manufacturing PMIs are due and little change is expected.
With concerns on financial institutions and sovereign financing persisting in Europe, some extension of ECB unconventional measures could be expected at this week’s ECB decision. But US data will likely remain the driver for EURUSD this week depending on if data divergences between the US and the Eurozone continue.
CAD

The Q2 GDP figure was lower than expected at 2.0% annualized, which helped push USDCAD higher during the session. The Q1 figure was revised slightly lower but was still strong at 5.8%. Officials have cautioned the economy could slow down relative to Q1 but they believe the economy is on the right track. While USDCAD could remain range-bound in the near-term, medium-term fundamentals remain favourable to the Canadian dollar.
AUD

The current account narrowed as the trade balance recorded the highest surplus since the early 1970s. Our Australian economics leave their Q2 GDP forecast at 1% with downside risk. The stronger public demand data largely offset the lower than expected net exports contribution. While the ‘expenditure’ side of the GDP accounts continue to point to a circa ¾% rise for Q2, the strong gains in real household incomes and corporate profits suggest ‘income’ GDP – along with real ‘production’ GDP – should average up to a near 1% GDP print. There also appears compelling evidence that Q1 GDP’s print of 0.5% will be revised higher, to at least 0.8%.

TECHNICAL OUTLOOK

EURUSD BEARISH Trend is bearish with focus on 1.2588 ahead of 1.2434 Fibonacci support. Short-term resistance is defined at 1.2933.
USDJPY BEARISH Approaches 83.60 trend low, move below the level would expose 79.75 key support. Short-term resistance is defined at 85.91 intraday high.
GBPUSD NEUTRAL Move below 1.5324 would put odds in favor of bearish trend. Near-term resistance lies at 1.5713 ahead of 1.5999.
USDCHF BEARISH The pair eyes 1.0131; a break here would open up the way towards 0.9918. On the upside resistance holds at 1.0466 ahead of 1.0676.
AUDUSD NEUTRAL Model has turned neutral; 0.9222 and 0.8771 act as the next bull and bear triggers respectively.
USDCAD BULLISH Bullish pressure is mounting on 1.0680; break of the level would open 1.0853. Initial support is defined at 1.0473 ahead of 1.0248.
EURCHF BEARISH The cross continues to define fresh trend lows. Next support lies at 1.2742 ahead of 1.2403. Near-term resistance comes in at 1.3146.
EURGBP BEARISH Bearish pressure holds at 0.8142 ahead of 0.8068 key support; break of the level would expose 0.7974. Short-term resistance tested at 0.8282 with 0.8383 retracement level next.
EURJPY BEARISH Momentum is negative; the pair targets 105.44 with scope for 100.00 next. Near-term resistance is defined at 111.11 ahead of 114.74.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By Jonathan Dayan – Financial trading tools like market insight tools, trader messaging tools and social trading networks can deliver a lot of added value to the average trader, because they offer new financial market insights quickly and simply. Despite the clear advantages which these tools provide they are often disregarded by traders who find them complicated to use. This is a pity because they can add a lot to the effectiveness of the average trader, particularly those traders who are relatively new to financial market trading. In this article we’ll take a brief look at the ways in which these three trading tools can help traders get more from their financial trading today and every day.

Trader Insight Tools – An Inside Take On The Markets

Trader insight tools offer a snapshot of the sentiment which is forming around market trading. Used in combination with live price feeds or trading charts they enable you to see not only where the market in a particular asset stands at a particular moment in time, but also where other traders expect it to go next. These tools aggregate the trading behavior of dozens or hundreds of other traders to give you a live record of the percentage of sampled traders who are buying and the percentage who are selling a particular asset. As a result they offer a microcosm of the wider financial market (the more traders are sampled the more accurate they are likely to be). Such tools are an excellent foundation for placing trades in the market, in particular for new traders who may not be clear on the best way to trade a particular asset. It is a general view that the majority of people sampled on a particular issue are more likely to be correct than the minority and that the greater the difference between the size of the majority and of the minority opinions, the more likely this trend is to hold. On this basis, many traders feel comfortable entering trading positions simply by taking a quick look at a trader insight tool to look for assets where there is a clear imbalance between buyers and sellers which they can use as a signal to enter the market in the direction of the majority opinion.

Trader Messaging Tools – Talk With other Traders

Trader messaging tools based on the instant messenger system are available through numerous trading platforms these days. These tools allow individual financial traders to communicate directly with each other, regardless of where in the world they reside and whether or not they have ever contacted each other before. This tool is a very effective way for traders to learn new information about the market from their trading peers as well as sharing hints and tips which they may have picked up themselves. Because these tools allow global communication between traders they are an effective way of disseminating new market information which can arise in one region to the wider trading world – where better to get new tips on trading USD/CAD than Canada, or Gold tips than Australia? As a result, communication with other traders offers the potential to gather new information before the rest of the market and thereby to get ahead of the latest trend. In theory, therefore, trader messaging tools are one of the most valuable tools on offer by trading platforms. In practice however this may not be the case. This is because communication is by nature a two way activity and whereas we may wish to communicate with other traders to learn what they know it does not mean that they want to communicate with us. Another issue that is faced by this tool is the question of sincerity. Put simply, how can we know that the trader we are communicating with is giving us sincere and honest information or advice? Regardless of these possible limitations trader messaging systems are a valuable and popular addition to the financial trader’s toolkit.

Social Trading Networks – The Ultimate Trading Tool

Social trading networks like eToro’s OpenBook combine the best features of trader insight and trader messaging tools and offer a whole range of additional features besides. As a result they are increasingly viewed by financial trading pundits as the trading tools of the future. Social trading networks borrow the best insights from social networks like Facebook and combine them with the specific needs of the financial trader in order to produce a tool which enables every trader to see into the inner workings of the financial market as never before. By using a social trading network the trader can see the trading profiles of every other registered trader and through it learn every feature of how that trader trades the market: their success rate; the assets they like trade; when they’re active in the market etc. On the aggregated level the mass of information collected by a social trading network enables traders to see live rankings of the most successful traders: on the day, in the week or in the month. Using this information it is possible to start following the activity of specific traders, to add them as friends, start communicating with them and even to start copying the trades they make: live and in real time. As a result, social trading networks offer an ideal learning environment for financial traders which can help traders at every level of experience gain new insights into trading and spot new trading opportunities by observing and interacting with other traders.

In conclusion, each of these three trading tools offer a variety of enriching ways for you to upgrade your financial trading. By employing these trading tools in your trading strategy you should find yourself better able to harness the mass of information about the financial markets which is available and more in control of the trading decisions you make as a result. Financial trading should be as rewarding and enjoyable an activity as possible and by employing these trading tools in your daily financial trading activity you should find your trading experience improves as a consequence.

Forex Market Article provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

By CountingPips.com

The US dollar has been trading lower against most of the major currencies in the forex markets as positive manufacturing data has boosted risk appetite today. The positive investor mood has pushed the higher yielding currencies as well as the US stock markets to higher trading levels in the afternoon of the US trading session. The dollar has been decreasing on the day versus the euro, British pound sterling, Australian dollar, New Zealand dollar, Swiss franc and the Canadian dollar while trading higher against the Japanese yen.

The US stock markets, meanwhile, have surged higher on the first trading day in September with the Dow Jones industrial average increasing by over 200 points, the NASDAQ up by over 50 points and the S&P 500 higher by over 25 points at time of writing. Oil has risen by $2.12 to the $74.04 level while gold has fallen by $4.70 dollars to trade at the $1243.60 level.

ISM Manufacturing data increases for 13th month

U.S. Manufacturing data activity surpassed market forecasts and rose for the 13th straight month in August, according to today’s report by the Institute for Supply Management. The ISM Report On Business index reading for economic activity was at a 56.3 score in August following July’s reading of 55.5. A score above 50 is considered to be growth and less than 50 is considered to be contraction in that sector.

Market forecasts were predicting a decline for the month of August and a reading of 52.8 in the index.

Norbert J. Ore, chairman of the ISM Business Survey Committee, commented in the report that, “Manufacturing activity continued at a very positive rate in August as the PMI rose slightly when compared to July. In terms of month-over-month improvement, the Production and Employment Indexes experienced the greatest gains, while new orders continued to grow but at a slightly slower rate. August represents the 13th consecutive month of growth in U.S. manufacturing.”

The customers inventories and prices indexes both rose by over 4.0 percentage points in August, according to the report. Production increased by 2.9 percent, employment rose by 1.8 percent while the backlog of orders index fell by 3.0 percent. Exports declined by 1.0 percent while imports edged higher by 4.0 percent to round out the data.

August ADP employment data reverses six months of gains

U.S. employment data released today in the form of the ADP National Employment Report showed that U.S. private employment declined unexpectedly in the month of August. The nonfarm private employment fell by 10,000 workers in August following the revised increase of 37,000 jobs in July. The jobs data for July was revised slightly lower from the original estimate of 42,000 jobs gained. ADP private employment had risen for six consecutive months from February to July before the August decrease.

Today’s job report was a surprise to market forecasters that were expecting an approximate increase of 15,000 jobs for the month.

The service-providing sector registered an increase of 30,000 jobs in August while the goods-producing sector fell by 40,000 jobs. Manufacturing had a loss of 6,000 jobs, construction jobs fell by 33,000 workers and the financial services sector  decreased by 5,000 workers. Construction and financial services jobs have now both continued to decline for over three years straight, according to the ADP report.

Medium-size businesses shed 6,000 workers in August while small businesses or companies with less than 50 workers registered a decrease of 6,000 workers. Large businesses or companies with more than 500 workers saw employment payrolls virtually unchanged for the month.

The market-moving US Nonfarm Payrolls report for August is to be released Friday at 12:30 pm GMT with early market forecasts predicting a loss of approximately 105,000 jobs following a decline of 131,000 workers in July.

Sometimes the investment weather forces you to ‘buy a coat,’ says Robert Prechter

By Elliott Wave International

When it’s sunny, you head outside without a thought, but when it’s rainy, you look for your umbrella.

When the markets are trending up, you don’t worry about your investments much, but when the markets turn bearish … what do you do?

In an interview with Jeff Sommer of The New York Times in July 2010, Robert Prechter said that he is convinced that a “market decline of staggering proportions” is on its way, and that individual investors should get out of the market and into cash and cash equivalents, such as Treasury bills.

“I’m saying: ‘Winter is coming. Buy a coat,'” Prechter said. “Other people are advising people to stay naked. If I’m wrong, you’re not hurt. If they’re wrong, you’re dead. It’s pretty benign advice to opt for safety for a while.”

Read some of the latest nuggets directly from Elliott Wave International President Robert Prechter’s desk — FREE. Click here to download a free report packed with recent analysis and forecasts from Prechter’s Elliott Wave Theorist.

For more specific advice as to why now is not the right time to speculate in stocks, here’s an excerpt from chapter 20 of Prechter’s business best-selling book, Conquer the Crash — You Can Survive and Prosper in a Deflationary Depression, 2nd edition 2009.

* * * * *

Should You Speculate in Stocks?

Perhaps the number one precaution to take at the start of a deflationary crash is to make sure that your investment capital is not invested “long” in stocks, stock mutual funds, stock index futures, stock options or any other equity-based investment or speculation. That advice alone should be worth the time you spent to read this book.

1. Stocks May Go to Near Zero

In 2000 and 2001, countless Internet stocks fell from $50 or $100 a share to near zero in a matter of months. In 2001, Enron went from $85 to pennies a share in less than a year. These are the early casualties of debt, leverage and incautious speculation. Countless investors, including the managers of insurance companies, pension funds and mutual funds, express great confidence that their “diverse holdings” will keep major portfolio risk at bay. Aside from piles of questionable debt, what are those diverse holdings? Stocks, stocks and more stocks. Despite current optimism that the bull market is back, there will be many more casualties to come when stock prices turn back down again.

2. Stock Mutual Funds Will Fall, Too

Not only will many stocks fall 90 to 100 percent, but so will a substantial number of stock mutual funds, which cannot exit large equity positions without depressing prices and which have the added burden to you of one percent (or more) annual management fees. The good news is that we will finally find out who the few truly good fund managers are and which ones were heroes by virtue of being around for a bull market.

3. The Fed Won’t Be Able To Save the Stock Market

Don’t presume that the Fed will rescue the stock market, either. In theory, the Fed could declare a support price for certain stocks, but which ones? And how much money would it commit to buying them? If the Fed were actually to buy equities or stock-index futures, the temporary result might be a brief rally, but the ultimate result would be a collapse in the value of the Fed’s own assets when the market turned back down, making the Fed look foolish and compromising its primary goals, as cited in Chapter 13. It wouldn’t want to keep repeating that experience. The bankers’ pools of 1929 gave up on this strategy, and so will the Fed if it tries it.

Read some of the latest nuggets directly from Elliott Wave International President Robert Prechter’s desk — FREE. Click here to download a free report packed with recent analysis and forecasts from Prechter’s Elliott Wave Theorist.

By Russell Glaser – Spot gold prices have surged and are closing in on their all-time high. Negative risk sentiment surrounding the recovery of the global economy and renewed inflation fears have caused traders to once again begin to bid the price of gold higher.

The price of spot gold yesterday up at $1,246.75, after opening the day at $1,236.75.

Spot gold prices have climbed off of their lows of $1,156. The rebound in the price comes as fears of a double dip recession and slowing global economic growth are weighing on the market, influencing traders to buy gold as a safe haven asset.

Negative fundamentals from the US housing sector may be influencing traders. A lack of confidence and spending has ensued since the US government ended the subsidies it enacted to support the lagging housing sector.

Yesterday’s release of the Federal Reserve Open Market Committee (FOMC) meeting minutes provided an insight into the Fed’s thought. The Fed voted 9-1 to keep the Fed’s balance sheet at its current level by purchasing treasuries as the MBS that the Fed hold on its books expire. Dissent was voiced during the 2 days meeting as many FOMC members felt deflation was not an issue. However, they did express their views that higher inflation could return if the Fed did not drain the excess liquidity from the money supply.

Other factors that may be moving the price of spot gold higher are heavier trade volumes as traders return to their trading desks from the summer holidays. Also wedding season in India during the fall months typically spurs an uptick in the demand for gold.

Turning to the weekly chart, a rising trend line begins at the end of September of 2009 with the price making 3 points of contact with the trend line. This indicates this is a significant trend line. Momentum points to a price move higher as the Momentum (7) is sloping higher.

The all-time high of $1,265 looks to be in range with support appearing at $1,224, (S1) followed by $1,156 (S2).

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.