Archive | april 2015

Gold on the verge of a breakdown if we move much lower than today

INTRA-DAY NEWSLETTER ~ April 24 2015

HotForex Gold & Silver

Gold Long Term Chart
On a few occasions recently, we have been discussing the LONG TERM 2005 channel line and the action at that channel line in our view is what is causing a tight trading range as gold now has to make the decision of the next medium term move as to up or down.  With the last five bars not being able to do anything more than hold the line,  and with April having the smallest monthly price range we have seen in a long time,  odds (as we have been saying) that a good sized move in gold arrives soon.   The action at the channel line does favor the downside will win and gold’s last leg down before the bottom should get underway.   The only exception is if the month of May can close above the highs of April.  We have odds but never absolutes in markets.  Gold can certainly hold here and turn higher but the odds are against that.   A weekly close below 1172 will favor 1155-1163 on Monday and if we lose that, new bear market lows should be expected for gold.   The next key support for gold (not shown on this chart) is 1080-1100 and then near 1000.  Without getting into detail on this report, odds favor the bear market low in gold will be near 875.  The only other exception we see is perhaps 990-1040.
Gold Short term
The seasonal rally (Mid-March to Mid-May) gave us one push that lasted just three week and since then gold is sideways.  Thus the seasonal is WEAK as it has been each year since the bear market began and it’s looking like it’s going to be the same this year as well, especially if we lose the trend line we discussed above.
Resistance now moves to 1194-1206 and support near 1172.   A close below 1172 leaves only 1155-1163 as support before new lows.   I suspect we’ll get a small bounce at 1130 but odds favor it will be just that.   If we do close below 1172 then the trading range we’ve been in favors a resolve to the downside.  That low spike on the chart near 1170 on January 5th and the 1160 print low during the week of March 16th to the 23rd is last support in gold before new lows.   In summary, the short term has to hold here.  A close below 1172 favors lower into the 1st week of May.
 
Cycles
Whenever we go into a narrow trading range like we’ve witnessed where we just go back and forth from 1180-1225,  it makes the short term cycle turns difficult to interprit as opposed to when we are trending.  A close below 1170-1172 will favor a cycle inversion and a low into the first week of May.
We believe the tight trading range is due to the BIG decision gold has to make at that 2005 trend line shown on the first chart in this report.  For those who think a Greek exit is gold bullish we remind you of the aftermath of Cyprus when gold collapsed a short while later.  For the record we were not BULLISH on gold then due to that event and we feel the same about Greece.  We don’t see it as a bullish event.   And we don’t mean the day after it happens but overall.   We expect the liquidity squeeze we have been saying is coming for three years will have the same effect as 2008 did.   While its not guaranteed that gold will go down, it is the odds favorite.   As far as the global meltdown, its as close to guaranteed as it gets.  The only greater guarantee is death and taxes.
Granted 2008 was just a DEMO using the corporate world to see what would happen when the Global one takes place.  And it is expected to do the same.   Gold will crash along with everything else and the true bull market in gold will only return after the crash.  The loss of confidence in the system will trigger the end of low rates, and the bond markets 300 year low in interest  rates will have completed.  That’s when the gold turn most likely occurs.
On the short term cycle chart we’ve removed some of the higher lines for today and added a few lower ones which we normally don’t.   This is just for the purpose of identifying where minor and important support is on the downside.   The low at the end of March and the high at the beginning of April were both within the “window” of time for that blue cycle.   It could have produced either.  However the failure to move higher on the last red cycle and the fact we are breaking below the lows of that time,  odds now favor a close below 1170-1172 means the next cycle turn (blue) due May 3rd will be a low.
Silver
If silver breaks its support line look for 1500-1525 as next support and then 1450.  Any close below 1450 favors 1300.

 Source

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Spot gold rises as U.S. dollar index weakens

HotForex Gold & Silver

 

 

Reuters | NEW YORK/LONDON April 22, 2015

By Chris Prentice and Jan Harvey

NEW YORK/(Reuters) – Gold rose past chart resistance on Tuesday, recouping most of the previous session’s losses in choppy, currency-driven trade after the U.S. dollar turned lower and bolstered bullion’s appeal.

Global stocks gained as upbeat corporate earnings offset rising worries about a possible Greek default. [MKTS/GLOB]

Spot gold <xau=>was up 0.5 percent to $1,202.90 an ounce by 1:56 p.m. EDT (1756 GMT) after surpassing resistance at $1,200 to touch a session high of $1,204. U.S. gold futuresfor June delivery settled up $9.40 an ounce, or 0.8 percent, at $1,203.10.

„We’re looking at currency and bonds today. We saw the dollar index start off really strong, and now has backed off and turned negative,“ said Phillip Streible, senior commodities broker at RJO Futures in Chicago.

The greenback reversed earlier gains against a basket of major currencies. <.DXY> A stronger U.S. dollar makes greenback-traded commodities more expensive to holders of other currencies.

Gold also gained support from trader-positioning as details emerged of a European Central Bank proposal to increase the insurance it would demand in return for emergency funding to Greek banks. Those details pressured the euro earlier in the session. [FRX/]

Gold prices have been under pressure this year from expectations that the Federal Reserve is preparing to increase interest rates for the first time in nearly a decade.

That would boost the dollar and reduce gold’s appeal. Until there is further clarity on the outlook for U.S. rates, gold is likely to struggle for direction, analysts said.

„Overall uncertainty on the timing and pace of Fed tightening adds to investors’ reluctance to put on sizeable positions at this point,“ UBS said in a note on Tuesday.

Physical demand in China, the second largest gold consumer, was lacklustre overnight, traders said, with metals house MKS reporting „low turnover and modest price action“ during Asian trading hours.

Traders were also watching physical demand in top consumer India, said to be strong during the Akshaya Tritiya festival, considered one of the most auspicious days to buy gold.

Supply of the metal into India rose sharply in the build-up to the festival.

Silver <xag=>was up 0.5 percent at $15.98 an ounce, as platinum <xpt=>eased 0.05 percent at $1,144 and palladium <xpd=>climbed 0.08 percent to $770.12.

(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Alison Williams, Louise Heavens, Jeffrey Benkoe)

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Gold futures weaken; silver drops more than 2%

 

Published: Apr 20, 2015 2:25 p.m. ET

HotForex Gold & Silver

Gold futures settle lower on Monday, but silver took a bigger hit amid concerns over a slowdown in China’s economic growth.

Upbeat earnings as well as economic stimulus measures in China helped buoy confidence in the stock market, luring investors away from gold.

Gold for June delivery on Comex GCM5, -0.66% fell $9.40, or 0.8%, to settle at $1,193.70 an ounce on Comex. That was its biggest one-day point loss since April 9.

But silver was pressured by concerns over a slowdown in China’s economic growth. Silver is widely used as an industrial material and that makes it somewhat sensitive to changes in economic conditions in countries such as China, said Fawad Razaqzada, technical analyst at FOREX.com.

May silver SIK5, -1.81%  sank 34 cents, or 2.1%, to settle at $15.889 an ounce. That was the lowest settlement since mid-March.

Meanwhile, U.S. stocks rallied, after China’s central bank over the weekend cut the amount of reserves commercial banks are required to hold, freeing up about $200 billion for lending.

China’s additional stimulus also serves as confirmation that the Chinese will continue to gradually devalue their currency, which is near-term bullish for gold prices in China, said Tyler Richey, analyst for the 7:00’s Report.

The dollar gained ground on major rivals Monday, likely contributing more pressure to prices for dollar-denominated gold.

The euro EURUSD, -0.63%  fell versus the greenback DXY, +0.43%  as the market worried that negotiations between Greek officials and the country’s creditors have made little progress.

Still, gold has lost some of its appeal as the European Central Bank’s Mario Draghi reiterated that Greece isn’t going to be booted from the eurozone, said Adam Koos, president of Libertas Wealth Management Group.

This week, Koos said traders will be focused on the U.S. dollar.

Gold bulls will be hoping for a decline in the dollar following last week’s drop on subpar U.S. economic data, he said. “The USD has had such a huge swing to the north side this past nine months, it’s only natural to expect an exhale in rates and subsequent bump in gold.”

“There isn’t a ton of news expected this week, but the Fed’s policy meeting at the end of the month will be at the top of traders’ minds as an earlier rate hike would definitely be a game changer,” Koos said.

In other metals trade, July platinum PLN5, -1.67%  fell $18.70, or 1.6%, to $1,148.80 an ounce, while June palladium PAM5, -1.24%  shed $10.55, or 1.4%, to $772.40 an ounce.

May copper HGK5, -1.75%  lost 4.15 cents, or 1.5%, to $2.733 a pound.

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