Gold futures jump with physical demand on the rise...

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Gold futures rose more than 1% on Wednesday as bargain hunters waded into the beaten-down market, lifting physical demand for the metal on the back of fresh data pointing to difficulties for the U.S. economy.

 Gold for June delivery GCM3 +0.89%  climbed $15.10, or 1.1%, to $1,423.90 an ounce on the Comex division of the New York Mercantile Exchange. Prices were poised to recover the loss of $12.40, or 0.9%, they saw a day earlier.

The fall on Tuesday was gold’s first in four sessions, with prices for the precious metal hurt after disappointing data on manufacturing data in China,a rally in equities and a stronger U.S. dollar.

Orders for U.S. durable goods fell by a seasonally adjusted 5.7% in March, more than the 3.2% decline expected by economists polled by Market Watch.

If the economic data releases covering April are similar to the month prior, then the Federal Reserve isn’t likely to give any signs of an early withdrawal of quantitative easing, said Chintan Karnani, independent bullion analyst based in New Delhi. QE has been a supportive factor for gold, as it can lead to inflation and gold is often seen as a hedge against inflation.

Bargain buys

Traders and investors are stepping in to buy the recent big dip in prices, said Jim Wyckoff, senior analyst at wsj.com in a daily market note. “Demand for physical gold world-wide remains strong after last week’s price plunge.” Read about why investors should be bullish on gold price as long as chaos reigns.

Gold prices are on track for a roughly 11% drop this month, and analysts have been pointing to declines in the metal’s holdings among exchange-traded funds and lower gold-price forecasts as factors behind the recent selloff.          

Goldman Sachs on Tuesday closed its recommendation for clients to “short” gold, telling them to exit out of those bets on lower gold prices. The investment bank on April 10 cut its short- and long-term gold forecasts as prices approached bear-market territory.“Strong demand for physical gold world-wide, and especially from Asia, continues to underpin the gold market,” said Wyckoff.

The U.S. Mint this week stopped sales of its smallest-denomination gold bullion coins as demand reduced government inventories.

Year to date, demand for the one-tenth ounce coins are up more than 118% compared with the same time a year ago, the U.S. Mint said in a memo to authorized purchasers, according to The Wall Street Journal.

Other reports this week have said there are shortages of gold bars and coins in some countries, with gold retailers jacking up their charged premiums over the spot price of gold, Wyckoff said.      

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News Source: www.wsj.com

                      

Gold Is Undervalued in Fiat Money Terms...

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The question on everyone's mind is whether or not the gold bull market is over? Such an utterance seems glib in the face of 8,000 years of history that suggests otherwise. Of course, there is a time and moment to own gold. That time is still now. So you will not be surprised to hear us say, no it's not over; it's just getting interesting.

Another question that is on everyone's minds -- or if it isn't, should be -- is, was the gold market sell-off a product of continued and escalating manipulation?

I will explore the answers to both these questions, and by understanding reality we can begin to understand whether gold can reassert itself in its justifiable role as an antidote to the current fiat currency system.

Is Gold Currently Undervalued?
First off to state publicly, gold is still undervalued in 'fiat money' terms, that's the easy question to answer.People have said to me gold has gone up a lot, and so now it's too high. I always reply that gold has a price and a value. These two constructs are not interchangeable. Price is a level at which you make an exchange, and value is whether it is worth it. Right now gold remains undervalued when examined in the context of other assets, primarily against paper money.

To illustrate this point we can now see how gold is as undervalued, incredibly, as it was in 2000, just before this gold market began to rise in nominal terms.

One phrase that sums up my thinking – price has changed, but nothing has changed.
To develop this statement a little further, I want to quote a friend, Detlev Schlichter, on the recent brutal bloodletting in the gold market. Detlev wrote a really eloquent book Paper Money Collapse, about the inevitable failure of paper money economies. He states:

"After 40 years of relentless paper money expansion and in particular 25 years of Fed-led global bubble finance, the dislocations in the global financial system are so massive that nobody in power dares to turn off the monetary spigot and allow market forces to do their work, that is to price credit and to price risk according to the available pool of real savings and the potential for real income generation rather than according to the wishes of our master monetary planners."
This fact remains, so nothing has changed.

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www.wsj.com

A Make or Break Week Ahead for the Stock Market...

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  It's make-or-break time for the first-quarter earnings season, and it comes just as the stock market is showing signs of strain.About 170 S&P 500 and 10 Dow companies report earnings in the week ahead, and they include everything from tech icon Apple to industrial names like Caterpillar and energy companies like giant Exxon. As of Friday, a fifth of the S&P 500 had reported, and two-thirds had better-than-expected earnings. But an unusually high amount—57 percent—missed their top-line revenue estimates, according to Thomson Reuters.

That's a cause for concern, since stocks traded in one of the most volatile seesaw patterns of the year in the past week, as worries about global growth increased amid a dramatic sell-off in commodities. The Dow finished its worst week this year 2.1 percent lower at 14,547, and the S&P 500 was down 2.1 percent at 1,555. The Nasdaq was down 2.7 percent for the week, even with Friday's big gain of 1.3 percent on the back of a tech rally.


The week ahead also has a light but important economic calendar, including home sales data Monday and Tuesday, durable goods Wednesday, and the first look at first-quarter GDP Friday. Even though it is a reading of past activity, first-quarter GDP is important since, at estimated 3 percent growth, the rate is about double what is expected for the current quarter. Traders have also been fixated on events surrounding the Boston Marathon bombers, though it was not seen as a market factor.

"I think this rally is a little weary," said Art Cashin, director of floor operations at UBS. "The 'buy the dips' have been in and they bought most of the dips. The question is will they continue, or is the market getting ready for the spring swoon everyone is talking about."


Cashin said the Dow broke an important trend line at 14,500 Friday as IBM had its worst day in eight years, but it rose back above that level by the end of the day. The S&P struggled at its 50-day moving average Thursday, but it too got about a dozen points above it by Friday afternoon. Commodities markets were calmer by the end of the week, but gold lost 7 percent in the past week, sliver lost 12.8 percent, copper lost 6 percent and oil lost 3.6 percent.


"By any sort of measure, we're kind of overdue for some sort of a pullback, and maybe we're finally going to get it," said Bill Stone, chief investment strategist at PNC Wealth Management. Year to date, the S&P is up 9 percent and has not had a significant pullback. He noted that the economic data has been disappointing.


"Once you had a market that moved up like this one has, expectations are really your enemy. We're not meeting expectations … then you throw in earnings season. Earnings, I would argue, are coming in better than expected. Underneath the surface is something that's not quite so healthy," he said. "They're struggling on the top line, the revenue side. That's indicative of a global economy growing below trend." The commodities sell-off is also signaling a global weakening, and it accelerated when China released disappointing GDP data Monday.

Gina Martin Adams, institutional equity strategist at Wells Fargo Securities, has also been expecting a pullback. "I still think we're in some sort of process of trading a top. It's hard for me to say," she said. "There has been enough disturbance to suggest the trend is now in question, which is the first time you can say that this year. Certainly the factors have been lining up."
"Every April we have this. It's scary how the market is trending exactly as it has for the last four years running," she said. "There is this confluence of factors. The fundamental case—everyone was excited about the economy improving, but that story broke down. The earnings are not improving. The commodities complex looks just like last year."


Even though economists expect a weaker economy, they do not expect it to be as soft as last year, and stock strategists also expect the market to rebound later in the year, after any sell-off.

Adams said seasonally, April can actually be a good month for stocks so they may hold on, but in the next few weeks, there could be a downdraft as there was in the past three years. "May is when you get a little worried … we've got a sideways trend in place," she said, adding it's also possible there could be a sideways correction. That means stocks would grind in within a range, instead of selling off.

This makes the earnings season particularly key, as traders look for clues about the extent of the soft spot and its impact on corporate profits.

"The next two weeks are really important. That's when the bulk of the market cap reports. They will be extremely important. There's a limited amount of economic data to consume. The huge reports come at the beginning of the month," when April employment data is released, Adams said.

She added that is especially watching industrials and technology. "Those are the areas where the market is expecting the greatest weakness. If there are areas where there could be a surprise and guide higher, those could be the areas. They should be the areas where the turnaround story could occur, should it show up. I'd like to see that, but it's not in my forecast."


Industrial companies GE and Honeywell both reported earnings that slightly beat expectations Friday. GE, however, reduced its forward guidance while Honeywell slightly raised it. In tech, the message has been mixed. IBM fell 8 percent Friday after its weak earnings report, but shares of Google and Microsoft both gained even though revenues missed slightly.

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news source: www.bbc.com

G20 agrees not to set hard targets on debt reduction

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Finance leaders of the G20 economies said on Friday they agreed they did not need to set hard targets for reducing national debt levels, and said they would be watching for negative effects from massive monetary stimulus efforts, such asJapan.

Russian Finance Minister Anton Siluanov said at a news conference that finance officials from the Group of 20 nations believed overall debt reduction was more important than specific figures.
"We agreed that these would be soft parameters, these would be some kind of strategic objectives and goals which might be amended or adjusted, depending on the specific situations in the national economies," he said.

In a communiqué released after a two-day meeting, the G20 said it would be "mindful" of possible side effects of extended periods of monetary stimulus. Central banks have flooded their economies with cheap funds to try to boost borrowing and spending but that has raised concerns about excessive capital flight, particularly to developing nations.
Siluanov said the G20 agreed that greater monitoring of the side effects of Japan's $1.4 trillion program announced earlier this year was needed.

The G20 discussions were dominated by talk of the struggling euro zone, Siluanov said, where harsh austerity measures have failed to lift the region out of its economic slumber. The nature of the discussion was of some concern to officials in other nations.

"It was supposed to be a G20 meeting, but for a moment I thought it was a G7 meeting. All that we heard was how sick Europe is and how badly affected many countries of the world are," said India's finance minister, P. Chidambaram, who spoke at the Peterson Institute in Washington.
"They have a very accommodative monetary policy. They are doing whatever it takes to rescue economies that seem to be tumbling one after another."

SOFT DEBT TARGETS
There has been some disagreement over the need for specific targets for reducing debt. The United States and Japan have opposed committing to a targeted debt-to-GDP level. Russia - this year's G20 chair - had hoped to secure an agreement on targets by the time G20 leaders meet in St. Petersburg in September.

The world's biggest economies are rethinking the austerity drive that dominated the last few years. The austerity argument has been undercut by weakness in economies that undertook severe measures to cut deficits, including Britain, which is headed into its third recession in the last five years.
Fitch cut its credit rating on Britain on Friday to double-A-plus, citing expectations that general government debt will rise to 101 percent of GDP by 2015-2016 due to weak economic growth.
Siluanov also said a greater amount of coordination was needed with the International Monetary Fund on global liquidity, with recommendations expected by next July.

G20 ministers called on the Financial Stability Board to oversee work on reforms for short-term interest rate benchmarks such as Libor in the aftermath of a global rate-rigging scandal. FSB was asked to report back in July on its progress.

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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 trade advice... http://century-financial-brokers-uae.blogspot.ae/

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