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Gold Fundamental Forecast – February 11, 2016

By:
James Hyerczyk
Published: Feb 10, 2016, 13:33 UTC

Analysis and Recommendations: April Comex Gold futures finished down -$15.60 at $1183.00. The catalyst behind the move was a strong rally by the U.S.

Gold Fundamental Forecast – February 11, 2016

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Analysis and Recommendations:

April Comex Gold futures finished down -$15.60 at $1183.00. The catalyst behind the move was a strong rally by the U.S. equity futures markets. The break from the 7 1/2 –month high posted earlier in the week indicates that investors are leaving safe-haven investments. Some of the price action is related to position-squaring ahead of Fed Chair Janet Yellen’s testimony before at 10:00 a.m. ET.

With today’s testimony, investors will be looking for clues regarding the timing of another rate hike, this event could be a market-mover, so traders should be prepared for better-than-average volatility and volume throughout the session. This is Yellen’s first address before Congress since the Fed raised rates in December. She is expected to insist that further rate hikes this year remain on track, albeit at a slower pace.

This answer should satisfy the markets at this time because they are looking for clarity and conviction during the current confusing time.

Traders should expect to see Yellen take on some pointed questions from the members of the House Committee on Financial Services. After raising interest rates in December for the first time since 2006, the Fed remained on the sidelines in January, but issued a dovish monetary policy statement. This move reflected a softening in U.S. economic growth.

If Yellen is hawkish then the U.S. Dollar should rally. This should put pressure on gold futures. However, if Yellen delivers the company line, “a rate hike will be data dependent”, of if she paints a pessimistic picture of the economy then look for the U.S. Dollar to weaken and for gold prices to find support.

Just a couple of months ago, the Fed was hinting at the possibility of a series of rate hikes in 2016, but these plans have drastically changed since the first of the year, with many experts openly questioning if the central bank will make any more moves before next year. Hopefully, Yellen will put to rest some of the speculation.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

China – Lunar New Year  
  USD API Weekly Crude Oil Stock  2.400M  3.80M 3.837M  
  NZD Electronic Card Retail Sales (MoM)  0.3% 0.3% -0.2%  
  AUD Westpac Consumer Sentiment  4.2% -1.0% -3.5%  
  AUD HIA New Home Sales (MoM) (Dec)  6.0%   -2.7%  
  GBP Industrial Production (MoM) (Dec)  -1.1% -0.1% -0.7%  
  GBP Manufacturing Production (MoM)  -0.2% 0.1% -0.4%  
  GBP NIESR GDP Estimate     0.6%  
  USD Fed Chair Yellen Testifies        
  USD Crude Oil Inventories   3.933M 7.792M  
  USD FOMC Member Williams Speaks        
  USD Federal Budget Balance (Jan)   45.0B -14.0B
  NZD   Business NZ Pmi (Jan)     56.7    
  GBP   RICS House Price Balance (Jan)   52% 50%    
30-minute Gold
30-minute Gold

Upcoming Economic Events that you should be monitoring: 

China – Lunar New Year  
   EUR Eurogroup Meetings        
  USD Initial Jobless Claims   281K 285K  
  USD Fed Chair Yellen Testifies        
  AUD RBA Governor Stevens Speaks   3.933M 7.792M  
  AUD Home Loans (MoM) (Dec)        

Thursday, February 11, 2016

Government Bond Auctions

Date Time and Country

Feb 11 N/A Italy Euro 4-5bn 30-yr syndicated bond auction

Feb 11 11:03 Sweden Holds I/L bond auction

Feb 11 11:10 Italy Announces details of bond auction

Feb 11 11:30 UK 3.5% 2045 Gilt auction

Feb 11 19:00 US Holds 30-year bond auction

Feb 11 N/A US Details of 30-yr TIPS auction on Feb 18

Feb 12 11:10 France Details of bond auction on 18 Feb

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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