Gold Weaker On Profit Taking, Bearish Outside Markets; FOMC On Deck

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Gold prices ended the U.S. day session moderately lower Tuesday. A lack of fresh, bullish fundamental news and a looming FOMC statement kept buyers on the sidelines. Some profit taking from recent gains was also featured Tuesday. The key “outside markets” were in a bearish daily posture for the precious metals Tuesday—a firmer U.S. dollar index and weaker crude oil prices. December Comex gold was last down $6.50 at $1,345.70 an ounce. Spot gold was last quoted down $7.20 at $1346.50. December Comex silver last traded down $0.023 at $22.515 an ounce.

The market place awaits the results of the U.S. Federal Reserve’s Open Market Committee meeting, which began Tuesday morning and ends early Wednesday afternoon. There will be no press conference by Fed Chairman Bernanke after this meeting. The FOMC is expected to leave U.S. monetary policy unchanged, but as usual traders and investors will be closely parsing the FOMC statement, looking for any clues on the timing of upcoming changes in policy.

Most in the market place presently believe the Fed will not start to cut back on its monthly bond purchases until early next year—most likely the second quarter at the earliest. This scenario favors the raw commodity market bulls, including the precious metals markets. Any hints at this week’s FOMC meeting that the “tapering” of monetary policy could come sooner than the second quarter of 2014 would likely be bearish for most markets.

There was a heavy slate of U.S. economic data released Tuesday and it was a mixed bag for markets. The highlight was a weaker consumer confidence index for October, amid the U.S. government shutdown. The confidence data did give the gold market a brief lift, but it did not last long.
The U.S. dollar index was firmer Tuesday on more short covering after hitting a 10.5-month low last Friday. Meantime, Nymex crude oil futures were lower and hovering not far above the recent two-month low.

The London P.M. gold fix is $1,346.75 versus the previous P.M. fixing of $1,361.00.
Technically, December gold futures prices closed nearer the session low Tuesday. The gold market bulls and bears are still on a level near-term technical playing field. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,375.40. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,300.00. First resistance is seen at this week’s high of $1,361.80 and then at $1,375.40. First support is seen at Tuesday’s low of $1,339.80 and then at $1,300.00.

December silver futures prices closed near mid-range Tuesday amid chart consolidation. The silver bulls and bears are on a level near-term technical playing field. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at $23.445 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $21.00. First resistance is seen at this week’s high of $22.715 and then at last week’s high of $21.91. Next support is seen at Tuesday’s low of $22.30 and then at $22.00.


December N.Y. copper closed up 75 points at 327.70 cents Tuesday. Prices closed near mid-range. Bulls and bears are on a level near-term technical playing field. Copper bulls' next upside breakout objective is pushing and closing prices above solid technical resistance at the October high of 335.50 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the October low of 321.50 cents. First resistance is seen at 328.55 cents and then at 330.00 cents. First support is seen at Tuesday’s low of 324.60 cents and then at last week’s low of 323.40 cents.

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News Source: www.marketwatch.com

Fed tapering plans knock out Wall Street, set dollar for best weekly gain in a year...

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This week all eyes were on the Federal Open Market Committee (FOMC), which was the major local and global market player and mover throughout this week as it ended its two-day monetary policy meeting yet the Federal Reserve said it may start paring stimulus measures later this year.

In fact Bernanke said the Federal Open Market Committee may reduce the pace of bond purchases modestly later in 2013, and may end the purchases around mid-2014, putting in mind that this reduction in stimulus will occur only if the economy shows signs of “substantial progress.”

Accordingly as stimulus prospects weigh Wall Street closed multiple times in red territories with the Dow Jones losing more than 200 points and the Standard & Poor Index shed more than 30 points while that the EU shares closed in red several times.

If truth be told the Fed maintained its monthly $85 billion of bond purchases, with the U.S. economy and particularly its labor market are recovering. The Fed said that the purchases will continue until “the outlook for the labor market has improved substantially in a context of price stability” and that it will continue to reinvest maturing securities.

Furthermore Fed Chairman Ben S. Bernanke said at the regular press conference that follows the end of the two-day meeting for the Fed’s monetary policy makers, that the Fed sees a moderate pace of growth in the U.S. economy, while unemployment levels are still elevated.

Interest rate increase would not occur anytime soon. Bernanke added. However, Bernanke said the reduction represents unanimity between the Committee members.

Also on interest rates, Bernanke said the 6.5% unemployment is a threshold and not a trigger for an interest rate rise, and that if it hits that threshold, the Fed then will evaluate the option of increasing rates, and the Fed will also look at inflation rates, which are still well below the Fed’s target.

Bernanke also said inflation levels remain below the Central Bank’s objective of 2 percent and has remained subdued for some time now, and likely to move back towards the target of 2 percent, and added that the central bank will closely monitor inflation levels.

On the other hand this week a report showed that more employees in the U.S. had filed applications for jobless benefits in the past week, indicating lingering weakness in reducing unemployment amid second-quarter slow growth.

In fact Initial jobless claims rose 18,000 in the week-ended June 15 to 354,000, from a revised 336,000in the previous week. Analysts had expected for a slight gain to 340,000. Labor Department data showed Thursday.Yet general business conditions in the Philadelphia region improved significantly in Jun at the fastest rate in two years, according to a survey of manufacturers by the Philadelphia Federal Reserve.

If truth be told the general index soared to 12.5 in June, the highest since April 2011 after a drop to 5.2 in May, overtaking estimates that called for a slight improvement to minus 2.0. A reading of zero is the dividing point between expansion and contraction in the region.

Also Manufacturing activity in the New York region rebounded in June, highly above analysts` estimates, but remained weak in details, as new orders and shipments decreased having the Empire State manufacturing index improving in June to 7.84 from negative 1.43 in May.

All eyes were on the Federal Open Market Committee (FOMC) this week, which was the major local and global market player and mover as it ended its two-day monetary policy meeting. 

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.reuters.com