July 14 (BLoomberg) — Hans Goetti, chief investment officer for Asia at Finaport Investment Intelligence, talks about the outlook for a third round of quantitative easing by the Federal Reserve. Goetti, speaking from Singapore with Linzie Janis on Bloomberg Television’s “First Look,” also discusses his investment strategy. (Source: Bloomberg)
Spot Gold Testing Psychological $1,600 Price Level
The price of spot gold climbed to a new all-time high following Moody’s intention to review the US AAA rating. $1,600 is the next psychological resistance level and could be breached today as Fed Chairman Ben Bernanke will testify before the Senate. The rally in gold prices is quite remarkable with the commodity rising for the past eight consecutive trading days.
Spot gold is currently trading at $1,590 after climbing as high as $1,593 earlier in the European trading session. Prices were bolstered yesterday by Bernanke’s Congressional testimony as the Fed Chief left the door open for another round of quantitative easing. The threat of a US default and the potential for US interest rates to remain at low levels for an extended period of time has been supportive of the metal and will likely continue to do so until an agreement is reached between the President and Congressional Republicans.
After bottoming at $1,477 on July 1st, spot gold prices have risen almost 8% along with the price of silver which is up 15% in the same time period.
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Midweek Update: Gold, Silver and Oil in Focus
By Chris Vermeulen, thegoldandoilguy.com
The past couple months (May and June) have been tough on precious metals and crude oil. But recent price action shows that buyers are stepping back into the market buying up these commodities once again.
Let’s take a quick look at the charts…
Gold Futures Daily Chart:
As you can see from the chart below, gold is making a new high. The big question is if it will do what it has done many times in the past, which is make a new higher for only a few days to get the general public (herd) long, only to then get sold into and come back down? The next few sessions will give us a better feel for this breakout/rally.
Silver futures Daily Chart:
Silver on the other hand has not performed as well as its yellow sister. Rather we are seeing a base being formed. The exciting thing about base patterns is that the larger and longer the base takes to form, the larger the potential move once a breakout occurs.
Crude Oil Hourly Chart:
Crude oil looks to be forming a base and or inverse head & shoulders pattern. Both these patterns point to higher prices with a price target around the $110-112 area.
Mid-Week Trend Report:
In short, I feel commodities are now in the spot light and where investors will be looking to put their money to work over the next couple weeks as the falling dollar directly helps boost their prices.
The equities market continues to be volatile with large waves of buying and selling almost hitting the them every trading session. During key pivot points in the market we know pricing for investments get a little crazy at times and we manage positions accordingly and anticipate some moves.
That’s all for now, but if you would like to get my pre-market video analysis each morning and intraday updates along with trade alerts be sure to join my premium service here:
Get my trading reports free each week here: http://www.thegoldandoilguy.com/trade-money-emotions.php
Chris Vermeulen
Weekly Unemployment Claims Lower than Forecast
This week’s report on unemployment claims by the US Department of Labor continues to show over 400,000 new unemployment claims for the past week, but the data was lower than many analysts had expected; albeit mildly.
Economists had estimated that approximately 413,000 new claims were filed in the US, but the afternoon’s reading of 405,000, coupled with weakly optimistic Core PPI and nominal Retail Sales reports, helped give some weight to the idea that the US economy is in fact still growing, but that its pace of improvement has slowed significantly.
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Diebel Says Can’t Rule Out `Technical’ U.S. Debt Default
July 14 (Bloomberg) — Charles Diebel, head of market strategy at Lloyds Bank Corporate Markets, talks about Moody’s Investors Service’s downgrade warning on U.S. debt. Diebel also discusses today’s Italian bond auction with Francine Lacqua on Bloomberg Television’s “On the Move.”
US Retail Sales Reports Conflicted
The two major reports on retail sales out of the American economy this afternoon painted a mixed picture. The core value of retail sales saw zero movement, with an actual reading of 0%, below forecasts for 0.1% growth. The value of nominal retail sales, however, revealed a somewhat different picture.
Nominal retail sales for July appear to have grown by 0.1%, beating forecasts which were expecting a contraction by 0.1%. Overall the data seems to cancel itself out and bear little weight on today’s currency markets. But the broader picture does seem to favor very weak growth in the US retail sector, which both supports mild steps towards riskier assets by investors and a call for another round of quantitative easing in the face of such economic reports.
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New Zealand GDP Grows 0.8% in Q2
Market forecasts had expected an insignificant level of growth in the south Pacific economy of New Zealand. The slightly-less-than-insignificant findings may bode well for the island economy.
While true that both expected and actual figures show very minor growth in New Zealand’s gross domestic product (GDP), the news that growth was beyond expectations should give a much-needed bump to the value of the New Zealand dollar (NZD) over the next several days.
Giving additional weight to New Zealand’s recent GDP growth was a house price index (HPI) report from the Real Estate Institute of New Zealand (REINZ) which showed the monthly change in home values move up 1.3% from last month’s decline of 1.8%.
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Forex CT 14-7-11 Video News Update
Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
Moody´s Threat is Serious News
Moody´s put the US on negative watch on Wednesday thus warning on the AAA rating. The threat should be taken seriously says the Senior Strategist Ib Fredslund Madsen.
The lack of progress in Washington in recent days over the dept ceiling caused Moody´s to threaten the US. The Senior Strategist believes that democrats and replublicans in spite of current disagreements will agree before the deadline.
Video courtesy ofen.jyskebank.tv
Dollar Consolidates Losses After Moody’s Puts US Rating on Review
The greenback came off of its lows versus the majors a day after Moody’s put the US AAA rating on downgrade for a review. This afternoon a slew of US economic data is due out as is additional testimony by Fed Chairman Ben Bernanke. Given the heightened volatility as seen in the first half of the week, the euro’s recent gains may be vulnerable.
The dollar extended its potential QE3 induced loss into early Asian trading after Moody’s placed the US Aaa bond rating on review for a possible downgrade. The rating agency cited the possibility the debt limit will not be raised in time to prevent a missed payment on US Treasury Bonds. Most expectations are for Republicans and the President to piece together some sort of settlement in time for the August 2nd deadline. In the European session the dollar has come off of its lows versus the majors but the USD is still well within yesterday’s ranges following a sharp rout of the dollar after Bernanke’s testimony left the door open for QE3.
A comparison of Bernanke’s testimony yesterday with his last press conference following the Fed Funds decision shows the Fed Chairman’s words did not differ from previous policy statements. It will be a hard sell both to politicians and other FOMC members for another round of quantitative easing given the CPI data from May that showed US CPI rising 3.6% y/y and core CPI climbing to 1.5% y/y. But the Fed would in all likelihood step in with QE3 if the economy took a turn for the worst or if deflationary forces began to appear. This makes today and tomorrow’s inflationary data all that more important.
The European financial elite are meeting in Rome today in an attempt to create an additional rescue package for Greece. Discussions will also center on Italy. Tuesday’s successful debt auction helped the euro to recover from a 4-month low versus the dollar but Italian bonds are still trading at higher yields, as are the spreads between Portuguese, Greece, and Spanish debt with their German bund equivalents.
The spread between the German 2-year the US-2 year note has dwindled to 91 bps in favor of the bund, a spread that continues to decline, thus supporting the USD. With the lower spreads on the 2-year notes and the EU that is clearly struggling to find a new solution to the debt crisis that will not create a credit event, traders should be weary of further euro gains versus the dollar. With the EUR/USD failing to move above its 100-day moving average at 1.4280 and the pair now testing the rising trend line on the hourly chart from the Tuesday low, his may be an opportunity for euro shorts to reassert themselves. A potential target may be back to the 1.4050 level which is roughly a 50% retracement from the move that began on Tuesday and looks to have ended early this morning.
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