Worst Quarter Since 2008!

Friday, September 30, 2011
Stock Market Commentary:

The third quarter of 2011 was the worst quarter for risk assets since 2008! Several key risk assets (multiple stock markets around the world, Copper, Crude Oil, etc.) officially entered bear market territory (marked by a decline of >20% from a recent high) in Q3 2011 which bodes poorly for U.S. stocks and the global economy. Nearly every day since mid-August, we told you that the major averages were simply rallying (on light volume) towards resistance (50 DMA line) and unless they broke above resistance, the sideways/range bound action would continue. Now, the major averages are simply trading near support (SPX 1101-1123) of their two month base and unless support is violated then, by definition, we should expect this sideways action to continue.

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Monday-Wednesday’s Action: Stocks Bounce Off Support

Stocks rallied on Monday as optimism spread that European leaders will unite and save Greece from defaulting on its debt. Gold was smacked and sliced below the pscyhologically important 1600 level for the first time in over a month as the bears remain in control of this market in the short term. In the U.S., new home sales remain on life support and at a nine-month low, at a 295,000 annual rate in August vs 302,000 in July and 303,000 in June. The report also showed that prices tanked -8.7% in August for both the median ($209,100) and the average ($246,000) new home around the country. This is just the latest in a series of weaker than expected data points for the ailing home sector.
On Tuesday, German Chancellor Angela Merkel and Greek Prime Minister George Papandreou met to discuss the ongoing debt problem. Papandreou said he can “guarantee” that Greece will deliver on all of its austerity pledges which sounds greet on paper but we have yet to hear a “CEO or Head of State” speak honestly about “the worst case scenario.” In the U.S., the economic data was less than stellar. The S&P  Case-Shiller index, which measures home prices around the country, gained for a fourth consecutive month to +0.9% in July amid peak buying season. The report easily topped the Street’s estimate for a decline of -4.5%, according to a Reuters. However, the Conference Board said consumer confidence plunged to 45.4 in September which missed the Street’s estimate for 46.0.
On Wednesday investors continued to read every headline out of Europe for clues on how EU leaders will handle the situation in Greece. Finland’s parliament voted to increase the size of the European Union’s debt bailout fund. The move increases the odds for a second Greece bailout and expands the European Financial Stability Facility (EFSF), set up after the Greek May 2010 debt crisis, effective lending capacity to 440 billion euros ($624 billion). In the U.S., durable goods order slid in August by -0.1%, following July’s healthy reading of +4.1%.

Thursday & Friday’s Action- Stocks Fade as Q3 Winds Down:

Before Thursday’s open, Germany’s Parliament approved a plan to expand the euro-zone’s bailout fund. This helped allay concerns of an imminent Greek default. In the U.S., two stronger-than-expected economic data points were released: jobless claims and Q2 GDP.  The Labor Department said, weekly jobless claims slid by -37,000 to 391,000 last week which was below the psychologically important 400,000 mark for the first time in months. This easily exceeded the Street’s estimate for a decline of -3,000. Elsewhere, the government said final Q2 GDP rose +1.3%, which topped estimates of +1.2%. Finally, pending home sales slid -1.2% to 88.6 which was better than the -2% decline expected on Wall Street. Stocks were smacked on Friday as Q3 2011 came to an end. It was the worst quarter for risk assets since 2008. The benchmark S&P 500 shed 189 points or a whopping -14.3% last quarter.

Market Outlook- Rally Under Pressure:

The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, this sloppy and sideways action will likely continue. If you are looking for specific help navigating this market, please contact us for more information.

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Stocks Mixed as Q3 Winds Down

Thursday, September 29, 2011
Stock Market Commentary:

Stocks ended mixed on Thursday after Germany passed a key vote to expand the EU bailout fund and U.S. economic data topped estimates. Nearly every day since mid-August, we told you that the major averages were simply rallying (on light volume) towards resistance (50 DMA line) and unless they broke above resistance, the sideways/range bound action would continue. Now, the major averages are simply bouncing off support and unless support is violated (SPX 1101-1123) then, by definition, we should expect this sideways action to continue.
 

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Stocks Rally On German Vote & Stronger-Than-Expected Economic Data:

Before Thursday’s open, Germany’s Parliament approved a plan to expand the euro-zone’s bailout fund. This helped allay concerns of an imminent Greek default. In the U.S., investors were served to stronger-than-expected economic data points: jobless claims and Q2 GDP.  The Labor Department said, weekly jobless claims slid by 37,000 to 391,000 last week which was below the psychologically important 400,000 mark for the first time in months. This easily exceeded the Street’s estimate for a decline of -3,000. Elsewhere, the government said final Q2 GDP rose +1.3%, which topped estimates of +1.2%. Finally, pending home sales slid -1.2% to 88.6 which was better than the -2% decline expected on Wall Street.

Market Outlook- Rally Under Pressure:

The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.

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Markets Perched Below Resistance

Wednesday, September 28, 2011
Stock Market Commentary:

Stocks opened higher as optimism continued to spread that EU leaders will help prevent a Greek default. Nearly every day since mid-August, we told you that the major averages were simply rallying (on light volume) towards resistance (50 DMA line) and unless they broke above resistance, the sideways/range bound action would continue. Now, the major averages are simply bouncing off support and unless support is violated (SPX 1101-1123) then, by definition, we should expect this sideways action to continue.

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Markets Looking For Greek Bailout & Durable Goods Fall:
Investors continued to read every headline out of Europe for clues on how EU leaders will handle the situation in Greece. On Wednesday, Finland’s parliament voted to increase the size of the European Union’s debt bailout fund. The move increases the odds for a second Greece bailout and expands the European Financial Stability Facility (EFSF), set up after the Greek May 2010 debt crisis, effective lending capacity to 440 billion euros ($624 billion). In the U.S., durable goods order slid in August by -0.1%, following July’s healthy reading of +4.1%.
Market Outlook- Rally Under Pressure:
The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.


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Adam Sarhan Reuters Quote: Technically speaking, gold bull run not broken…yet

By Alden Bentley

NEW YORK | Mon Sep 26, 2011 5:20pm EDT

(Reuters) – It’s hard to be upbeat about gold these days, but technical analysts are keeping their faith in the long-term bull run — just barely.
As the precious metal fell by a record over $120 an ounce on Friday and Monday, peak to trough, gold selling snowballed as several important technical support levels were breached. What began in early September as a correction after several months of accelerating gains has threatened to become a rout.
But the most critical price points needed to maintain the post-2008 rally at around $1,500 an ounce have held firm for now, according to analysts who study candlestick charts and historical trends to predict prices.
Monday’s low at $1,534.49 was just above the 200-day moving average at $1,527, the first of three relatively clustered support levels that are either going to provide good reentry levels, or, if they all crumble, perhaps signal that this was more than a short-term correction.
The trendline connecting major lows at $680.80 on Oct 24, 2008, and $1,156.90 on July 28, 2010 lies around $1,472.60 and rises about $2 per day. Right below that at $1,451.43 is the 38.2 percent Fibonacci retracement of the 2008-2011 rally, which is an important technical objective for followers of Elliott Wave Theory and others.
“As long as that pull back is orderly, one would have to give bulls the benefit of the doubt in the long-term timeframe,” says Adam Sarhan, CEO of New York-based Sarhan Capital. “However, the bears remain in control of this movement.”
At its low of $1,534.49 early Monday, gold was down 20 percent from the record high at $1,920.30 set on September 6. While 20 percent is the conventional bear-market threshold for stock market technicians, it is less meaningful for gold because the market is so volatile and sometimes illiquid.
“As long as we are not settling below $1,500, I’m very, very comfortable in my bullish bias,” said Christopher Henwood, a commodities market analyst for Reuters Insider.
CORRECTIVE MEASURES
By Monday evening, gold had pared its losses to close 16 percent below its record. Such a loss is in keeping with corrections seen since the start of gold’s decade-long bull market, according to Sarhan, who said the average monthly pullback for gold since the uptrend started is 15.6 percent.
Gold closed at $1,620.09 per ounce on Monday, down from $1,655.29 on Friday. That is still a quintupling of prices since gold broke above $300 per ounce in 2002.
“This is simply in line with the normal average decline we’ve seen since 2002 in gold’s very strong bull market,” Sarhan said.
Indeed, since gold recovered from a 33 percent July-October 2008 retreat during the financial crisis, gold’s largest declines were 14 percent over 42 days in February-April 2009 and from December 4, 2009 to February 5 2010 with 15.2 percent shed.
“Normally in bull markets as established in gold, you see several pullbacks which shake out the weaker hands and also give the market and bulls a chance to digest the recent move,” said Sarhan.
Since the long capitulation started on Thursday, gold fell 8.2 percent, the deepest three-day slide since late October 2008. It gained momentum upon breaking below price levels identified as being important — usually previous highs and lows or trendlines drawn to extend through them.
This forced investors with long positions tied to gold going up to liquidate en masse to cut losses or lock in profits before they evaporated.
“Even if they are selling it here, chances are they’ve got some good money in this position, if they held it for a long time,” Henwood said.
On Monday spot gold moved below the 100-day moving average — widely watched as an important trend indicator by traders — which was the catalyst for much of the leg down on Monday.
But that move started in Asia trade, when markets were still relatively thin, and subject to bigger swings, without London and New York traders fully involved.
(Editing by David Gregorio)

Stocks Rally On E.U. Optimism

Tuesday, September 27, 2011
Stock Market Commentary:

Stocks rallied for a third straight day as optimism spread that EU leaders will help prevent a Greek default. Nearly every day since mid-August, we told you that the major averages were simply rallying (on light volume) towards resistance (50 DMA line) and unless they broke above resistance, the sideways/range bound action would continue. Now, the major averages are simply bouncing off support and unless support is violated (SPX 1101-1123) then, by definition, we should expect this sideways action to continue.
 

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Stocks Rally On Greek Optimism But U.S. Economic Data Remains Weak:

German Chancellor Angela Merkel and Greek Prime Minister George Papandreou met on Tuesday to discuss the ongoing debt problem. Papandreou said he can “guarantee” that Greece will deliver on all of its austerity pledges which sounds greet on paper but we have yet to hear a “CEO or Head of State” speak honestly about “the worst case scenario.” In the U.S. the economic data was less than stellar. The S&P  Case-Shiller index which measures home prices gained for a fourth consecutive month to +0.9% in July amid peak buying season. The report easily topped the Street’s estimate for a decline of -4.5%, according to a Reuters. However, the Conference Board said consumer confidence plunged to 45.4 in September which missed the Street’s estimate for 46.0.
 

Market Outlook- Rally Under Pressure:

The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.


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Stocks Rally On Greek Optimism

Monday, September 26, 2011
Stock Market Commentary:

Stocks rallied across the globe after the worst weekly decline for the Dow Jones Industrial Average since 2008 on optimism that EU leaders will help prevent a Greek default. Nearly every day since mid-August, we told you that the major averages were simply rallying (on light volume) towards resistance (50 DMA line) and unless they broke above resistance, the sideways/range bound action would continue. Now, the major averages are simply testing support and unless support is violated (SPX 1101-1123) then, by definition, we should expect this sideways action to continue.
 

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Stocks Rally On Greek Optimism & New U.S. Home Sales Plunge- Again:

Stocks rallied on Monday as optimism spread that European leaders will unite and save Greece from defaulting on its debt. Gold was smacked and sliced below the pscyhologically important 1600 level for the first time in over a month as the bears remain in control of this market in the short term.
In the U.S., new home sales remain on life support and at a nine-month low, at a 295,000 annual rate in August vs 302,000 in July and 303,000 in June. The report also showed that prices tanked -8.7% in August for both the median ($209,100) and the average ($246,000) new home around the country. This is just another dismal report for the ailing home sector.

Market Outlook- Rally Under Pressure:

The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.


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Stocks Testing Support (2011 Lows)!

Friday, September 23, 2011
Stock Market Commentary:

Nearly every major capital market (equities, euro, crude oil, gold, copper, etc…etc..) were smacked in the wake of the Fed’s meeting. Nearly every day since mid-August, we told you that the major averages were simply rallying (on light volume) towards resistance (50 DMA line) and unless they broke above resistance, the sideways/range bound action would continue. Now, the major averages are simply testing support and unless support is violated (SPX 1101) then, by definition, we should expect this sideways action to continue.

Negative Divergence: Copper & Overseas Markets Hit Fresh 2011 Lows!

We also discussed the negative divergence we began to see in the middle of September between U.S. equity markets and other capital markets. We find it disconcerting to see that Copper, several European stock markets, and crude oil all fell to fresh 2011 lows as U.S. equity markets were bouncing towards resistance.
It is also important to note that since 2008, Copper, crude oil, and several European and Emerging stock markets have moved before U.S. markets. Copper, China, & India’s stock markets all bottomed in Q4 2008 and U.S. markets bottomed in March 2009. Therefore, the fact that these markets also topped in 2011 before the U.S. markets and continue in many cases to hit fresh 2011 lows bodes poorly for U.S. markets. Therefore, staying on top of these subtle relationships is extremely important to successfully navigating our markets. At this point, the current rally is under pressure evidenced by several distribution days (heavy volume declines) since the latest FTD. It is important to note that even with the latest FTD, the major averages are still trading below several key technical levels which means this rally may fade if the bears show up and quell the bulls’ efforts.

Monday-Wednesday’s Action: Greek Default Likely & Fed Spooks Global Economy

On Monday, stocks snapped their longest winning streak since July after fresh fear regarding a Greek default resurfaced over the weekend. One of the big reasons behind this week’s massive global sell off was that the question regarding Greec’s default. Heretofore, we were concerned “if” the country would default, now the question is “when.”
After Monday’s close, S&P rating agency downgraded Italy’s credit rating by one notch to A/A-1 and kept its negative outlook. On Tuesday, the IMF said the global economy will grow +4% in 2011 and 2012. This was lower than their prior forecast in June of +4.3% in 2011 and of +4.5% in 2012. The U.S. growth projection was lowered to +1.5% in 2011 from +2.5% in June. Separately, the Commerce Department said U.S. housing starts fell -5% to a three-month low of 571,000 annual rate in August.
Stocks were pounded on Wednesday after the Fed announced operation “twist” and said several large U.S. banks’ credit rating were downgraded by Moody’s. Elsewhere, the National Association of Realtors said existing home sales jumped +7.7% month over month to an annual rate of 5.03 million units. The median home price slid by -5.1% from the same period last year.

Thursday & Friday’s Action: China’s PMI Falls Suggesting Global Economy Will Slow

Nearly every capital market across the world was pounded on Thursday after China said its factory sector contracted for a third consecutive month and concern spread regarding a global double dip recession. Stocks were relatively quiet on Friday as investors digested the week’s massive sell off. On a positive note, the major U.S. averages are simply testing support (2011 lows) and as long as support holds, this range-bound action will likely continue.

Market Outlook- Rally Under Pressure:

The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.

Markets Smacked In Wake Of Fed Meeting

Thursday, September 22, 2011
Stock Market Commentary:

Nearly every major capital market (equities, euro, crude oil, gold, copper, etc…etc..) was smacked on Thursday in the wake of the Fed’s meeting. Nearly every day since mid-August, we told you that the major averages were simply rallying (on light volume) towards resistance (50 DMA line) and unless they broke above resistance, the sideways/range bound action would continue. We also discussed the negative divergence we began to see in the middle of September between U.S. equity markets and other capital markets. We find it disconcerting to see that Copper, several European stock markets, and crude oil all fell to fresh 2011 lows as U.S. equity markets were bouncing towards resistance. We would also like to note that since 2008, Copper, crude oil, and several European and Emerging stock markets have moved before U.S. markets. Copper, China, & India’s stock markets all bottomed in Q4 2008 and U.S. markets bottomed in March 2009. These markets also topped in 2011 before the U.S. markets did. Therefore, watching these relationships are important to successfully navigating our markets. At this point, the current rally is under pressure evidenced by several distribution days (heavy volume declines) since the latest FTD. It is important to note that even with the latest FTD, the major averages are still trading below several key technical levels which means this rally may fade if the bears show up and quell the bulls’ efforts.

China’s PMI Falls, Global Economy Slows, U.S. Jobless Claims Edge Higher

On Thursday, China said its factory sector contracted for a third consecutive month in September which bodes poorly for the global economy. HSBC’s China Flash Purchasing Managers’ Index (PMI), slid to 49.4 which was lower than August’s reading of 49.9 and below 50 for the third consecutive month. The report implies that the global economy is slowing down since China’s factories are producing less goods. The global slowdown echoes negative concerns from the U.S. Federal Reserve regarding the healthy of the underlying economy.

Market Outlook- Rally Under Pressure:

The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
 
 

Stocks Smacked After Fed Decision

Wednesday, September 21, 2011
Stock Market Commentary:

Stocks digested a slew of headlines from across the globe on Wednesday as the Fed concluded their much anticipated two-day meeting. The major averages continued trading between support and resistance of their current base but most European markets are still near their 2011 lows. At this point, the current rally is under pressure evidenced by several distribution days (heavy volume declines) since the latest FTD. It is important to note that even with the latest FTD, the major averages are still trading below several key technical levels which means this rally may fade if the bears show up and quell the bulls’ efforts.

ECB Relaxes Rules, Existing Home Sales Jump, Banks Credit Rating Cut, & Fed Decision Slams Stocks

On Wednesday, the ECB relaxed rules for eligibility requirements on debt instruments to be used by financial institutions as collateral for borrowing from the bank. Under the old rules, CNBC.com reported that “debt instruments issued by credit institutions – except covered bonds – were only eligible if they were admitted for trading on regulated markets. This requirement has now been abolished, according to a release from the ECB.
In the U.S., the National Association of Realtors said existing home sales jumped +7.7% month over month to an annual rate of 5.03 million units. The median home price slid by -5.1% from the same period last year. Elsewhere, Moody’s cut the credit rating for Citigroup (C), Bank of America (BAC), & Wells Fargo (WFC) as concern spread that the government would not be in a position to help these banks if they needed it. At 2:23pm EST, the Federal Reserve concluded their latest meeting, held rates steady, and announced their “twist” program. The Fed will be $400 billion by June 2012 in an effort to make credit less expensive and stimulate spending and investment. In an effort to keep mortgage rates low, the Fed also said it would reinvest the proceeds from maturing agency debt and mortgage-backed securities into mortgage-related debt. The Fed also said downside economic pressure remains a concern.

Market Outlook- Rally Under Pressure:

The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
 
 

Latest MSN.com Quote- Gold enjoys biggest jump in eight days

Gold jumped to its biggest gain in eight sessions on Tuesday, snapping back from steep day-ago losses as the anticipation of further US stimulus mingled with new fears over global growth.
In a jittery session marked again by gold trading less like a safe haven and more like a risky commodity, bullion rallied in the US mid-morning following downbeat forecasts from the International Monetary Fund, and held gains later in theday even as stocks pared increases and the US dollar rose.
It drew some strength from a poll at the world’s biggest bullion conference showing gold is forecast to rise to $US2,019 an ounce by November 2012. Expectations of softening policy from the US Federal Reserve on Wednesday also lent support.
The day’s wide trading range and thin volume – 40 per cent below the one-month average for US futures – highlighted the volatility that has plagued gold for the past month, tainting its image as a haven of stability and safety.
By 2.30pm EDT (0430 Wednesday AEST), gold’s spot price, which tracks trades in bullion, was above $US1,802 an ounce, after rallying to more than $US1,810. Its last registered trade on Monday was $US1,777.64.
US gold futures’ most-active contract, December, settled up $US30.2, or 1.7 per cent, at $US1,809.10, after trading between a high of $US1,814.30 and a low of $US1,772.
Prices fell about two per cent in the previous session as investors deserted gold for other perceived safe havens such as bonds and cash amid fears about a Greek debt default. US Treasuries and the dollar held relatively steady on Tuesday.
The session kicked off with an upward bias after Standard & Poor’s cut Italy’s credit rating in a surprise move that increased strains on the debt-stressed euro zone. For details, see “Today, we have the Italian downgrade and uncertainties from the Fed meeting, which are both major events, to bring the safe-haven play back into gold,” said George Gero, senior vice president at RBC Wealth Management in New York.
“On top of that, there’s intervention in the Swiss currency and less production of gold out of China, all of which are providing the perfect storm for a rebound.”
An International Monetary Fund report accelerated gains. It said Europe’s leaders were failing to act decisively enough to resolve the crisis and shaved the IMF’s global growth forecasts to four per cent for this year and next.
Dealers will now anxiously await the outcome of the Federal Reserve’s policy meeting on Wednesday, which was expected to try to make low long-term interest rates even cheaper by tilting toward longer-duration bonds.
“We really have been in a downtrend for the best part of the last couple of weeks and that needs to be broken … and for that, we need to move back above $US1,825,” said Ole Hansen, senior manager at Saxo Bank.
But some are sceptical that gold will stay in an upward trajectory, pointing to its inconsistency of late amid risk-off trades in commodities and stocks.
Gold had doubled its value in a long ascent since the 2008 crisis. It has risen nearly 30 per cent this year, hitting record highs above $US1,920. Last month alone, bullion jumped 12 per cent, its most since November 2009.
All of this, some say, has led to market fatigue.
“Gold cannot stay down too long in a depressed financial environment like today’s, but considering how much it’s gained this year, you’d expect the market to slow somewhat,” said Adam Sarhan at Sarhan Capital in New York.
“Also, a lot of today’s gains seem to be riding on the Fed, but the Fed could just disappoint. They could kick the can down the road, allowing more time for the US economy to pick up on its own, or come up with initiatives that fall below market expectations. That could hurt gold again.”
URL: http://news.ninemsn.com.au/article.aspx?id=8304778