Gold And Silver Subject To The FOMC Minutes...

It’s the Fed and the Fed and the Fed again. With traders are holiday around the globe and data light, the Federal Reserve is the main event. Although the FOMC minutes are a top tier event and are usually on center stage, they will have more importance to traders today as trading volume is down, news is light with politicians and traders on summer vacation and little data scheduled on the global economics calendar. This puts the FOMC minutes in the center ring under the big top. Regardless of the reading of the minutes markets should be volatile. Traders are now positioning themselves ahead of the release. Gold prices pared the initial losses as a stronger dollar and easing bond yields supported prices. Uncertainty regarding the Fed’s bond buying program also swung gold prices between gains and losses.

 Demand for US gold coins has eased in recent weeks as buying from retail investors slowed down amid recovering gold prices. Russia increased its gold reserves to 32.2 million troy ounces in July from 32 million troy ounces in June. Gold prices internationally are expected to remain in range as investors would await the FOMC meeting minutes to get cues on the future course of Fed’s bond buying program.


A recent survey showed that a majority of economists expect the Fed to announce a tapering plan in September and suggest that the Fed will cut back their asset purchases by 10 billion US dollars. Gold is trading at 1367.70 down by $4.90 in the Asian session. Gold futures recovered yesterday to close higher on COMEX, as investors were encouraged by prospects for seasonal demand from Asia as the market awaited release of the latest US Federal Reserve policy-meeting minutes.

Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, increased to 914.12 tons, as on August 20. Silver holdings of ishares silver trust, the largest ETF backed by the metal, increased to 10,555.7 tons, as on August 20. Silver has taken a major tumble as trader’s book profits. Silver is down by 81 pips this morning trading at 22.99 after holding this week above the $23 price level.

The dollar index, which measures the US unit against six rivals, edged down to 81.238 from 81.255 on late Monday, after swinging between losses and gains. The dollar nose dives late yesterday to trade in the upper 80 range and rebounded this morning to trade at 81.00 Copper futures traded steadily on Tuesday but eased this morning to trade at 3.323, with traders reluctant to place large bets ahead of the release of Chinese manufacturing data and details from the Federal Reserve’s most recent policy meeting. Copper prices rose on Tuesday as a weaker dollar supported prices. However, fears of bond tapering by Fed limited the upside in prices. The global nickel market was in surplus by 74,200 tonnes in the first six months of the year, according to the International Nickel Study Group. Base metals are likely to go down on caution ahead of FOMC meeting minutes and Chinese and Euro zone manufacturing numbers tomorrow.

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Gold Likely To Crash As ETF’s Pull Out...

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Gold is trading at 1333.70 flat in the Asian session as traders sell off to book profits after gold rallied. Gold prices in the futures markets are likely to be range-bound with a bias towards the downside in line with the global market. As it has been happening this year, the yellow metal once again is facing selling pressure. Investors are opting to sell at every rise and Monday’s over one per cent rise in the precious metal has given them an opportunity to cash in their investments. Data showed a climb in ETF purchases for the first time since June trader’s responded push up gold prices to recent highs. The market seems bent on hammering gold and that is one of the reasons why even data showing lower than expected growth are unable to drive it higher. The rise in gold holdings in exchange-traded funds did not happen on Monday as they were unchanged at 911.13 tonnes on SPDR Trust, world’s largest for gold.


Gold is taking a breather today after four days of gains but is holding near three-week highs on hopes that physical buyers and investors will return to the market.  The recent rally was sparked by the release of strong Chinese factory data on Friday which pushed up metals prices. The metal has gained over 4 per cent in the last four sessions through Monday, also profiting from US dollar weakness and a surprise rise in holdings of gold exchange-traded funds (ETFs). Gold rose nearly 2 per cent in the previous session on strong Chinese gold consumption and an inflow to SPDR Gold Trust, the world’s biggest gold ETF. The top eight gold ETFs have recorded outflows of about $US26 billion so far this year, hurting gold prices. A reversal in the trend will aid a price recovery.

China’s consumption of gold in the first six months of the year surged by more than half as sliding prices of the metal lured buyers, data showed, reinforcing expectations that the nation will overtake India as the world’s top gold consumer this year. Gold prices have lost about a fifth of their value this year after 12 years of gains, releasing pent-up demand across the world and particularly in India and China.

China consumed 706.36 tonnes of gold in the first half of 2013, up 54 per cent from the year-ago period, the China Gold Association said in a statement on its website.


Silver eased by close to 10 cents this morning after skyrocketing above the 21 price level on industrial demand and a rise in precious metals over the last few sessions. Silver is trading at 21.243 remaining strong against the gaining US dollar, which is trading at 81.44 this morning. Copper slipped while aluminum extended gains on Monday as signs of a pickup in top metals consumer China and expectations of encouraging eurozone data came up against a rise in the dollar.

 The U.S. commodities market regulator has subpoenaed a number of major metals warehousing firms, including Switzerland based commodities giant Glencore, seeking documents and communications from the last three years as an inquiry into complaints about inflated metals prices gathers steam. The metals warehousing scandal is weighing heavily on major US investment banks which control the prices and costs.

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Asad Rasheed
Direct:04-3841906
Email:asad@cfb.ae
Email:info@cfb.ae

For more information please visit our website century financial brokers.

Here are some useful links that you can follow:

Here is a CFB blog that gives useful daily Gold Analysis on dailybasis.

You can also follow CFB on facebook (useful advice on posts regularly)

Here is another blog that provides regular news and information and is very useful for Forex Signals.

News Source: www.cnbc.com

Marc Faber still thinks an 1987-style crash is coming...

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Marc Faber, the author of “The Gloom, Boom & Doom Report,” says investors need to brace for a drop of 20% or more by the time 2013 closes, predicting a market fallout similar to what was seen in 1987. “In 1987, we had a very powerful rally, but also earnings were no longer rising substantially, and the market became very overbought,” Faber told CNBC on Thursday. “The final rally into Aug. 25 occurred with a diminishing number of stocks hitting 52-week highs. In other words, the new-high list was contracting, and we have several breaks in different stocks.”

October 1987 marks a period no investor could easily forget. The S&P 500 SPX 0.39% is up around 20% for 2013 so far. Faber compares that to 1987, when stocks rose more than 30% up to the same point in time. But it was in the latter half of 1987 that things fell apart. On “Black Monday,” October 19, 1987, the S&P 500 fell 20.4% in the biggest single-day loss for Wall Street in history. It marked the end of a five-year bull market, and stocks ended up just about where they started.

He noted that during a two-day period this week, as the S&P 500 nears an all-time high of 1,709, there have been 170 new 52-week lows. That means just a few companies are driving the market higher.
“The only way this market can go up is if the 10 or 50 stocks that are very strong continue to drive the market higher, with the majority of stocks having actually peaked out,” Faber says.

Of course, the 1987-crash theme is not a new one for Faber. He made similar predictions in May and February. So how many times is Faber going to cry wolf before we see this happen? Well, ZeroHedge says he may be onto something, if you look at a Hindenburg cluster that’s been happening over the last four days. This indicator warns when more than 2.2% of traded issues are hitting new highs, while another 2.2% or more are making new lows. (Read more on the Hindenburg Omen.)

Ryan Detrick, strategist at Schaeffer’s Investment Research, just happened to be looking at this very topic on Wednesday, and reached a different conclusion from Faber. He notes that the Dow industrials DJIA 0.18% was up nearly twice as much in 1987 as it has been this year, and that the “masses” are also doing different things right now versus the crash year.

“Back then, “portfolio insurance” or dynamic hedging was the rage, whereby players had concluded they did not need to hedge or buy puts in advance of a market decline – they would instead buy their protection when and if the market weakened and would add to that protection on further weakness,” says Detrick. In other words, a lack of protection trade.Plus, there was a huge bubble in a selling put premium, which basically bet against a crash, wiping out many traders in the process.

“Compare that with today’s ‘big trade’ of buying volatility to hedge against potential market losses. Now, everyone is protected from a crash, thus lowering the odds of it actually happening. VIX call options and the action in the VXX have simply been phenomenal the past few years, ” he says.

Once again, we shall see.


”There really was a wolf here! The flock has scattered! I cried out, “Wolf!” Why didn’t you come?” — Aesop’s Fables, ‘The boy who Cried Wolf’.

Contact Us:

Asad Rasheed
Direct:04-3841906
Email:asad@cfb.ae
Email:info@cfb.ae

For more information please visit our website century financial brokers.

Here are some useful links that you can follow:

Here is a CFB blog that gives useful daily Gold Analysis on dailybasis.

You can also follow CFB on facebook (useful advice on posts regularly)

Here is another blog that provides regular news and information and is very useful for Forex Signals.

News Source: www.marketwatch.com