Gold Prices Still Responding To Fed Stimulus...

www.cfb.ae

Precious metals diverged this morning with gold climbing by $5.25 to trade at 1339.95, and silver has declined by 17 cents to trade at 20.275.  Gold futures declined on profit-booking, marking their first decline in 4-sessions just after the metal’s biggest one-day price gain in more than a year. Prices mostly traded in a range, as investors weighed the US Federal Reserve’s next move on monetary stimulus against the prospects for demand amid higher prices.

A report in Bloomberg yesterday, said that they are expecting the Fed to reduce its monthly asset purchases in September to 68 billion from the current 85 billion. Gold has recovered about $150 from a three-year low of $1,180.71 an ounce hit on June 28, after the US Federal Reserve said it would only start phasing out its stimulus once it was sure the economy was strong enough to stand on its own. This allayed fears of imminent cuts to the Federal Reserve’s monthly bond purchases, which is tantamount to printing money and supports gold’s appeal as a hedge against inflation.

The dollar traded lower against the euro and pared gains against the yen in a thin volume trade on Tuesday, as investors adjusted positions with technical levels in the absence of any economic data to drive direction. The combined government debt of 17-euro zone nations rose to 92.2% of gross domestic product, the highest in its history – in the first quarter of 2013, despite stringent austerity measures deployed in the region since the beginning of the financial crisis.

The base metals complex traded on a positive note as a result of a rise in risk appetite in the global market sentiments. Further, weakness in the US dollar acted as a positive factor for prices.
However, sharp upside in prices was capped on the back of LME inventories scenario and compounded by the scandal in inventory prices and Goldman. The Federal Reserve faces new pressure to explain why it lets banks trade raw materials and control supplies after congressional witnesses said regulators can’t really grasp what lenders are doing in industrial businesses.

Copper prices traded on a positive note in the yesterday’s trade increased around 0.5 percent on the back of decline in LME copper inventories around 0.4 percent which stood at 632050 tons.  Further, weakness in the DX coupled with upbeat global markets supported an upside in prices.


Traders can expect the base metals group to trade on the back of weak global markets. Further, strength in the DX will act as a negative factor. Additionally, a decline in China’s manufacturing data which is at 11-month low will exert downside pressure in prices. However, a sharp downside in prices will be cushioned or reversal can be seen on account of expectations of favorable manufacturing and services PMI data from the eurozone. Markets are expecting to see a climb towards 50 for eurozone PMI’s a miss could see some volatility in the marketplace.

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 

Bernanke will try to have some cake and will eat it too...

www.cfb.ae

 Bernanke is really in the hot seat today – both in terms of potential market responses and politically, as lawmakers’ attention directed the US Federal Reserve’s way is becoming increasingly glaring. The first Bank of Canada meeting under new governer Stephen Poloz is also on tap today.

The Bank of Japan meeting minutes overnight drew yawns from the market audience as the rhetorical line seems to be “implement what we have promised and it will take some time to judge the success of our policy” while anticipation is more important on the political front with this weekend’s upcoming Upper House elections. There were minor expression of concern by some members, but the unanimous decision was to stay the course on current policy.

Equity markets finally had a negative day yesterday, after a remarkable string of positive days, and bonds are looking well supported. If Bernanke follows up with more relative dovishness today without asset markets bulling sharply higher, this would appear to be the most USDJPY negative outcome. USDJPY bottomed out – you guessed it – right near the Ichimoku cloud area overnight – triple underlining the focus on this indicator, which has dropped several pips today and is closer to the 98.85 level now.

Looking ahead Bernanke testimony

 

Remember that Fed chairman Ben Bernanke’s full testimony today will be released at 1230 GMT before he actually presents it at 1400 GMT, followed by what is likely to be a very lively Q&A session, with Bernanke in the hot seat as I’m convinced that Republicans are increasingly making it a part of their party platform to remain critical of the Fed as the “Washington enabler”, with the endless irony that it is Republican constituents (the wealthy) that have benefitted the most, relatively speaking, from Fed policy over the last several years.

What the Fed would like to communicate, in my opinion, is that it is ready to act either way depending on incoming data, but that as things stand right now, it would prefer for bond yields to come back down some while it has no interest at all in driving too much exuberance elsewhere. Can it pull this off? If this message is successfully delivered, USDJPY may offer the most volatility.

Meanwhile, a Bernanke reminder that confirms expectations for tapering and leaves the market to take its guidance from incoming data rather than Fed signals would be more clearly USD positive, with trade selection depending on the asset market response (scary drop in equities could still push JPY higher, but EURUSD or GBPUSD might offer a more straightforward strong USD response in this instance).
Regardless of the message Bernanke delivers, the worst potential outcome in the following days would be a brief squirt of USD weakness followed by strong signs of support. If the USD is going to move to the strong side right away on the heels of the Bernanke testimony, I would look to EURUSD and GBPUSD for the most important signs of a reversal.

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.cnbc.com