Gold is at or Very Near, a Long-Term Bottom
GoldSeek
I am making Monday's premium report available to the public.
I doubt anyone was surprised by the reversal in the dollar index today.
It’s been made painfully clear that Bernanke is not going to tolerate a rising dollar, at least not for very long. Cycles are still working, and still generating bounces out of daily cycle lows, but they are never allowed to get any traction before the next beat down starts.
I would say there’s a pretty good chance that today’s reversal is signaling that the current daily cycle topped on day four, and the pattern of lower lows and lower highs is still intact.
Presumably the dollar will now start to decline and penetrate the May 1st intraday low before the next significant bounce. The daily cycle timing bands have adhered pretty closely to standard durations in the dollar index. I don’t see any indication that has changed, so we can probably expect the next significant bounce sometime around the last week of May.
Stocks:
If the dollar cycle has topped then the half cycle low scenario is still on the table.
In this scenario the stock market is on day 19 of its daily cycle and due to form a half cycle low at any time. As most of you probably remember, I’ve been expecting an extended consolidation in the general stock market. A dollar cycle topping on day 4 and a half cycle low on day 19 would be consistent with that theory.
If by some chance the dollar can recover and continue to rally for a few more days it could force stocks to penetrate the April 10th low. In that scenario I would re-phase of the daily and intermediate cycles as shown in the chart below.
At the moment I have no idea which scenario has greater odds of playing out, although I must admit the reversal today does not look good for the dollar.
Gold:
In my opinion gold is trying to move down into one more failed and left translated daily cycle, which I’m pretty confident would mark an intermediate degree bottom. However, as you can see from the chart below, as soon as Bernanke broke the dollar rally gold lost all of its downside momentum.
This has turned gold’s B-Wave decline into a mostly sideways consolidation for the last two months. If the dollar has indeed topped then I have my doubts that gold will be able to finish its intermediate decline and penetrate the April 4 low. The fact that the current daily cycle is running out of time may indicate that we are going to have to leave the April 4 low as an early intermediate bottom.
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Gold Rises as Jobs Data Renews Fed Easing Hopes
Reuters
Gold rose on Friday as investors selling crude oil and equities bought the metal after a weak U.S. nonfarm payroll report boosted bullion's investment appeal on talk that a weaker economy might prompt further monetary easing by the Federal Reserve.
Bullion still finished down 0.6 percent for the week. Gold has dropped $150 from a peak in late February after a strong run of U.S. data cast serious doubts over whether the Federal Reserve would launch a third round of government bond purchases, or quantitative easing, also known as QE3.
Fed Chairman Ben Bernanke "had said QE3 is going to be dependent on the incoming data. Next time when he speaks he's going to reemphasize that the Fed is willing to do more," said Axel Merk, chief investment officer of Merk Funds with about $650 million in assets.
"That's one of key reason why gold is up because we have had a very long period of consolidation," he said.
Gold rebounded from an early decline after the Labor Department reported that U.S. employers added 115,000 workers to payrolls last month, the third straight month in which hiring had slowed. The far weaker-than-expected jobs data knocked crude oil prices down 4 percent and hit the DowJones average with triple-digit losses.
Spot gold was up 0.4 percent at $1,643.20 an ounce by 3:43 p.m. EDT (1943 GMT).
Having traded $20 lower earlier in the session, the metal slowly chipped away losses on intensifying speculation of QE3, which has been a major driver behind gold's 5 percent rise this year.
U.S. gold futures for June delivery settled up $10.40 an ounce at $1,645.20, with trading volume about 10 percent below their 30-day average, preliminary Reuters data showed.
U.S. gold futures investors continued to digest news the CME Group (CME.O) was granted a 90-day reprieve from imposing new rules that will hike margins for some exchange members by as much as a third.
EURO JITTERS EYED
Traders said safe-haven buying could also benefit gold next week. Earlier this year, the metal had risen on jitters about the euro zone ahead of Sunday's elections in France in Greece.
UBS analysts said in a note that Europe debt fears could potentially disrupt global markets and derail investor sentiment, but gold is poised to benefit due to intense pressure on the euro.
Physical gold buying in top gold consumer India remained lackluster due to firm Indian gold prices as a result of the weak local rupees. <ID: nL4E8G44JV>
Among other precious metals, silver was up 1 percent at $30.35 an ounce. Spot platinum eased 0.3 percent at $1,522.50 an ounce, while spot palladium dropped 1.1 percent to $648.47 an ounce.
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Gold Bubble? “More People That Own Apple Stock Than Gold”
Goldseek
Gold’s London AM fix this morning was USD 1,629.50, EUR 1,240.20, and GBP 1,007.54 per ounce. Yesterday's AM fix was USD 1,642.50, EUR 1,251.24 and GBP 1,015.90 per ounce.
Gold dropped $16.50 or 1.00% in New York yesterday and closed at $1,637.10/oz. Gold gradually traded lower in Asia and in European trading.
Cross Currency Table – (Bloomberg)
Gold is down 1.6% on the week. The gold market has seen peculiar, lack lustre, low volume trading this week punctuated with sudden, oddly timed, very large sell orders. This leads to quick price falls followed either by slow, gradual recovery or a sharp bounce, prior to next bout of strangely timed sudden large sell orders.
This was clearly seen by the mysterious and massive $1.24 billion ‘Goldfinger’ trade on Monday.
While the $1.24 billion trade on Monday was attributed to a “fat finger” or algo trading in the gold market, there was a similar spike in volume at exactly the same time in silver – while all other markets saw little price movements.
There have been a few instances of this and it was seen yesterday again around 1330 GMT when there was a large 3,000 plus lot gold sell order which saw the price quickly fall by over $5 before a rapid recovery. Volume that size is unusual for that time of the day on the COMEX.
Yesterday the silver pits again suddenly saw the sale of some 200,000 lots in a minute or two that knocked the most-active SI future back a few cents (see chart below) and this led to silver breaching the $30/oz mark later in the session.
It is unusual to see a market building momentum in a certain direction and then to see massive sell orders in both the gold and silver market which then lead to further tech selling which can feed on itself.
At the same time there appear to be eager buyers at these levels who continue to accumulate on the dips. Ultimately prices will be dictated not by strange and potentially manipulative trading on the COMEX but by the global supply and demand of physical bullion.
Silver Price and Volume – May 3rd (Thomson Reuters)
Gold’s weakness may also be due to short correlations with equity markets – which have come off due to investor jitters after recent poor data and ahead of the US payrolls report.
Market expectations for Friday's non-farm payrolls report have fallen this week, with dealers now expecting that the economy added 125,000 to 150,000 jobs in April, below the previous Reuters consensus forecast of 170,000. Investors are expecting more lacklustre job growth last month following a trail of weak U.S. indicators.
A poor jobs number should lead to gold moving higher as it will lead to concerns about the US economy and concerns that QE3 will be launched leading to the further debasement of the dollar.
The European Central Bank kept rates steady at 1% as expected by market watchers. The euro faces additional risks on Sunday from elections in France and Greece which could create further disruption in the Eurozone about their countries commitment to fiscal austerity.
Euro gold is consolidating between €1,150/oz and €1,400/oz (see chart below). Given the terrible economic mess that Europe finds itself in, it seems only a matter of time before gold reaches €1,400/oz again and there is of course the risk of the euro falling by much more against gold.
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Gold’s 3-Month Drop Could be Basis for Fresh Uptrend
Economic Times
Gold prices have just fallen for three straight months, a dubious feat last achieved before the market's 12-year bull run, but with last year's positive drivers still simmering the lull could yet prove the basis for another push higher.
Questions over euro zone stability and the sustainability of anaemic U.S. economic growth could help the defensive qualities of the metal return to the fore of investors' minds, while chart analysis of its price also looks supportive.
On the face of it, gold does not look on the cusp of renewed greatness. Prices, currently at $1,660 an ounce, were pinned in April to their narrowest monthly trading range since last June.
Having ended February, March and April in the red, bullion is down more than 4 percent since the end of January, reflecting a slide in coin sales and holdings of the metal via exchange-traded funds (ETFs), a common vehicle for investor interests.
The decline in enthusiasm for gold came as investors took a slightly more stable economic backdrop as a catalyst to increase exposure to arguably more risky investments like stocks.
But such an extended fall is unusual. Prices have not fallen for three straight months since the period to May 2000, before the start of a rally that took gold from around $250 to nearly $2,000 last year.
Widening the lens to commodities as a whole, the asset class has struggled. The Thomson Reuters-JefferiesCRB index global benchmark hit its lowest level in April since December 2011, with investors awaiting greater clarity on demand from top raw materials consumer China.
Yet some analysts who study past price moves to determine the future direction of trade say gold is still looking poised to reignite a rally that took it to record highs above $1,920 an ounce last year.
"Although gold has been consolidating for months, I don't interpret this as challenging as long as the long-term trend support prevails," Stephanie Aymes, a technical analyst at Societe Generale, said. "The uptrend is still intact in my view."
Such a trend would only be broken, Aymes said, by a monthly close below $1,600 an ounce.
CENBANKS BUY
Such optimism contrasts with other global trends. Demand in the world's biggest bullion buyer India has been slack for much of the year so far and even the arrival last week of Akshaya Tritiya, one of the most auspicious gold-buying days, did not significantly lift sales.
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Gold Nudges at Two-Week Highs as Dollar Retreats
Reuters
Gold touched two-week highs on Tuesday, set for its longest stretch of daily gains in eight months, after a rally in the dollar fizzled out as investor concern escalated over the resilience of the U.S. and euro zone economies.
The dollar pared gains to fall against a basket of major currencies after the most recent spate of data from the United States revived some expectations that the Federal Reserve would offer additional support to the economy via a third round of quantitative easing, or purchases of govenrment bonds to anchor market interest rates.
Spot gold was up 0.4 percent at $1,670.76 an ounce by 1245 GMT, having fallen earlier to a session low of $1,658.83.
The price was on track for a sixth day of gains in a row, the longest rally since last August, yet without confirmation from the Fed of more support for the U.S. economy, gains could be limited in the near term, analysts said.
"What I would definitely say is, near term, I can't see the price breaking higher, to $1,700 an ounce or above. It needs another catalyst, something more powerful than perhaps in the near future there could potentially be QE," Nikos Kavalis, an analyst at RBS, said.
"Of course, an excessively loose monetary policy environment will continue but whether there is a need for another QE, I am not convinced," he said. "We are in an enviroment where market-specific fundamentals are taking a bit of a backseat and general sentiment is really the driving force."
Though the disappointing data may fuel expectations that the Fed might launch more QE, two of the central bank's policymakers both said they saw no need for further easing but also said they do not believe the Fed should quickly move to raise rates. <ID:nL1E8FU562> <ID:nL1E8G10JW>
The gold price ended April in the red for the third consecutive month after data showed improvement in the U.S. economy and the Fed's stance became less dovish.
LOW-RATE BOOST
Gold benefits from low interest rates in that it can compete more effectively for investor cash that can see diminished returns from stocks or bonds. Loose monetary policy also creates the potential for a pick-up in inflationary pressures, something gold can help portfolio managers guard against.
"The bullion markets have been on the defensive since U.S. Federal Reserve Chairman Ben Bernanke began distancing the Fed from a third round of quantitative easing in testimony to Congress on 29 February," HSBC analyst James Steel said.
"Prices appear to be stabilizing above $1,620 an ounce, however, and we believe that net long positions on the Comex in gold and silver have fallen to levels at which latent bulls may begin to rebuild positions. This leads us to believe that prices may bottom out, at least in the near term," he said.
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Gold Ticks Higher, Awaits Data
The Wall Street Journal
Gold futures edged higher on a weaker dollar as traders looked ahead to U.S. economic data due later Tuesday, though chatter about Monday's volatile trading persisted in the market.
The most actively traded contract, for June delivery, was recently up $5.30, or 0.3%, at $1,669.50 a troy ounce on the Comex division of the New York Mercantile Exchange.
A weaker dollar gave gold a boost. Dollar-denominated gold attracts buyers who use other currencies when the dollar eases as the yellow metal seems cheaper to these investors. The ICE Dollar Index was recently at 78.661 down from 78.824 earlier.
Market participants were cautiously upbeat ahead of U.S. manufacturing and construction-spending data. Reports released in recent weeks have painted a more obscure picture of the U.S. economy, stoking worries that growth is slowing and raising hopes of a third round of quantitative easing. Gold prices, which have rallied during past instances of monetary stimulus, are likely to benefit from another round of stimulus.
Elsewhere, traders continue to digest Monday's volatile early-morning trading. CME Group Inc. (CME) briefly halted trading in gold futures Monday following a sharp plunge in prices.
Many in the market initially attributed the fall in gold to a "fat finger", or input error. However, some participants later questioned whether the massive flux of activity seen at 8.31 a.m. was an erroneous trade or a flurry of automatic-selling orders triggered by electronic trading programs.
CME Group Inc. said that no transactions were cancelled Tuesday and that a 10-second trading halt occurred at 8:31 a.m., just as New York trading day was getting under way.
The move down could have been triggered by early-morning losses in silver, as the two precious metals often move in tandem, said Frank McGhee, head precious metals dealer with Integrated Brokerage Services.
"I think someone came in and realized that gold was out of line with silver on the day, sold into some stops and you had a cascade," said McGhee.
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Gold Climbs 1 Percent on Options-Related Buying
Reuters
Gold rose 1 percent on Thursday on options-related buying and as investors' risk appetite rose broadly a day after Federal Reserve Chairman Ben Bernanke said the Fed is prepared to do more for the U.S. economy.
The metal, which has tended to follow riskier assets most of this year, extended its rise to a third consecutive day as U.S. equities climbed on encouraging corporate results and a strong housing report. .N
Renewed gold buying could be seen after May COMEX options expired in the previous session as the liquidation pressure on the underlying futures have disappeared for now, traders said.
"After options expire, volatility may temporarily increase as investors have better leverage and can buy more options at a lower premium in the short term," said Thomas Philippides, derivatives broker at Capfeather Brokerage Group.
Spot gold was up 0.8 percent at $1,657.69 an ounce by 2:30 p.m. EDT (1830 GMT).
U.S. gold futures for June delivery settled up $18.20 at $1,660.50. Trading volume was below its 30-day average but continued to recover after falling to the lowest level of the year last Friday.
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Gold Extends Advance on Optimism Fed Will Spur Growth
Bloomberg
Gold rose the most in two weeks on speculation that the Federal Reserve may increase stimulus measures to bolster the U.S. economy after more Americans than forecast filed applications for unemployment benefits last week.
Jobless claims fell by 1,000 to 388,000 in the week ended April 21, from a revised 389,000 a week earlier, which was the highest since early January, Labor Department figures showed today. The median forecast of 48 economists surveyed by Bloomberg News called for a drop to 375,000. Fed Chairman Ben S. Bernanke said yesterday that the central bank will do more to fuel growth if necessary.
“The job market is softening, and the Federal Reserve may be forced to look at some form of easing,” James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida, said in a telephone interview. “Investors have started pricing that in.”
Gold futures for June delivery rose 1.1 percent to settle at $1,660.50 an ounce at 1:48 p.m. on the Comex in New York, the biggest gain for a most-active contract since April 12. The precious metal has gained 6 percent this year.
Silver futures for July delivery jumped 2.8 percent to $31.276 an ounce on the Comex, the biggest gain since April 12.
On the New York Mercantile Exchange, palladium futures for June delivery surged 2.7 percent to $672.65 an ounce, the biggest gain since Feb. 21. Platinum futures for July delivery rose 1.5 percent to $1,570.20 an ounce on the Nymex.
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Gold Climbs on Hopes that the Fed Will Conduct New Round of Bond Purchases to Help Economy
The Washington Post
Gold prices rose Thursday after a mixed batch of U.S. economic news raised hopes for some investors that the Federal Reserve will take additional steps to try to bolster growth.
Applications for unemployment benefits dipped to a seasonally adjusted 388,000 last week, near a three-month high, the Labor Department reported. That was an indication hiring has slowed down since winter.
The National Association of Realtors’ index of signed contracts to purchase homes increased 4.1 percent last month to the highest level in nearly two years.
The weaker unemployment report prompted more investors to buy gold, which is considered a relatively stable asset during uncertain economic times.
It was released a day after Federal Reserve Chairman Ben Bernanke said that the Fed will take further action if necessary to improve the economy. One option is additional bond purchases, also called a quantitative easing program.
“The catalyst for any kind of threat of an additional quantitative easing plan out of the Fed is going to be driven by a deterioration in the jobs market because that’s where ... the U.S. population feels that the most,” R.J. O’Brien commodities broker Phillip Streible said.
Gold prices have been supported for months in part by the Fed’s bond-buying programs. The bank bought Treasury bonds and mortgage-backed securities to push down long-term interest rates and stimulate borrowing and spending.
The Fed’s programs kept interest rates low and pressured the dollar, which weakened against other currencies. Gold and other commodities are priced in dollars, so a weaker dollar makes them more of a bargain for traders who use other currencies.
Gold for June delivery increased $18.20 to finish at $1,660.50 an ounce.
Other metals also were higher. May silver increased 85.1 cents, or 2.8 percent, to $31.207 an ounce, May copper rose 6.7 cents to $3.767 per pound, July platinum climbed $22.90 to $1,570.20 an ounce and June palladium rose $17.55, or 2.7 percent, to $672.65 per ounce.
In other trading, natural gas fell after the government said supplies rose last week more than analysts had expected. Natural gas declined 3.2 cents to end at $2.036 per 1,000 cubic feet.
Prices for the fuel have hovered near 10-year lows because an energy boom has created a glut of supply and demand was weak during the winter.
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Gold Rallies 1.1% on Weakened Dollar, Fed
MarketWatch
Gold futures on Thursday advanced to their best level in two weeks, supported by a weaker dollar and expectations the U.S. Federal Reserve will remain open to more economic stimulus.
Gold for June delivery gained $18.20, or 1.1%, to settle at $1,660.50 an ounce on the Comex division of the New York Mercantile Exchange. That was gold’s highest settlement since April 12.
Thursday’s rally followed a volatile session on Wednesday, when the precious metal dropped sharply but then rebounded after traders parsed the Fed decision to keep U.S. interest rates on hold.
In a press conference after the rate decision, Chairman Ben Bernanke said the Federal Reserve could undertake more monetary easing, if required.
The “knee-jerk” negative reaction to the Fed statement was tempered by Bernanke’s comments at the press conference, said Matt Zeman, head trader and strategist with Kingsview Financial in Chicago.
“The gold bugs ... took that to mean ‘OK, a third round of quantitative easing is still on the table,’” and were running with it on Thursday, Zeman said.
If gold closes above $1,671 or so for at least two consecutive sessions in the short term, the market could see a push to the $1,800-an-ounce level, he added.
An additional volley of monetary stimulus would help gold prices by reigniting concerns about currency debasement, a boost specific to the precious metal, and by pressuring the dollar, a boost to all dollar-priced commodities.
“Although the Fed did not announce another round of easing, intentions to keep monetary policy at highly accommodative levels are a bullish case for gold prices,” said James Steel, an analyst at HSBC Securities.
“The decline of gold prices on the Fed announcement was an overreaction,” Steel said. “The ability of gold prices to bounce back is a good sign.”
The dollar continued to move lower on Thursday, with the dollar index, which compares the U.S. unit’s performance to a basket of six currencies, slipped to 78.946 from 79.072 in late North American trading on Wednesday.
The weaker greenback also helped support the broader metals futures complex, as silver for May delivery rose 85 cents, or 2.8%, to end at $31.21 an ounce.
May copper futures advanced 7 cents, or 1.8%, to settle at $3.77 a pound, the highest since April 5. Copper has traded higher for three straight sessions.
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