Gold Monthly Fundamental Forecast August 2012

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Outlook and Recommendation

Gold closed the month at 1614.45 pumped up as markets talk up FOMC monetary stimulus, towards the end of the month as more and more eco data began to point towards the possibility of stimulus from the Feds, the dollar waned and gold picked up momentum.

Highest: 1629.25

Lowest: 1554.55

Difference: 74.70

Average: 1593.62

Change %: 1.18

One reason funds may feel comfortable about increasing exposure to Gold is they are concerned that the dollar may weaken during the US election campaign. With the US deficit and high debt likely to become important election issues in the US Presidential campaign, we would not be surprised if the dollar came under pressure.

The stand-off over the deficit ceiling last summer weakened the dollar and the same may be about to happen again as the US faces a ‘fiscal cliff’. Congress now has a choice: they can either let current policy come into play that would see the Bush era tax cuts expire at the end of the year and see automatic spending cuts introduced to prevent the debt ceiling from rising, or they could vote to delay the implementation of he new policy, or change it. The former is likely to hit economic growth; the latter is likely to add to the deficit. Although all eyes are on Europe at present, we expect the US election will soon also come into focus

FxEmpire provides in-depth analysis for each currency and commodity 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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Central Bank Name: Fed Reserve

Date of next meeting or last meeting: Sep 12

Current Rate: 0-0.25 % (- 0.75)

Statement highlights of last meeting: To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

Economic events for the month of August affecting USD

Date

Time

Currency

Event 

Forecast

Previous

Aug 1

12:15

USD

ADP Non-Farm Employment Change

122K

176K

 

14:00

USD

ISM Manufacturing PMI

50.4

49.7

 

18:15

USD

FOMC Statement

  

Aug 2

12:30

USD

Unemployment Claims

375K

353K

Aug 3

12:30

USD

Non-Farm Employment Change

101K

80K

 

12:30

USD

Unemployment Rate

8.2%

8.2%

 

14:00

USD

ISM Non-Manufacturing PMI

52.2

52.1

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About:FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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