Gold Weekly Fundamental Analysis September 24-28, 2012 Forecast
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Introduction: Gold prices always rise when there is uncertainty in the global economy. In times of uncertainty, investors tend to run towards gold. Suppose, rumors are flying high about some event in the world and this is increasing the uncertainty in the financial markets.
- Gold reacts to uncertainty in the markets
- Gold reacts to the Federal Reserve and monetary policy
- A drop in major currencies can indicate a run into gold.
- Remember investors tend to take profit from gold so watch for trading opportunities when investors are taking profits, not moving out of the markets.
Weekly Analysis and Recommendations:
Gold climbed all week ending Friday at 1772.85 after hitting a high of 1787.55. A generally upbeat tone appears to permeate the gold market, although at the same time there is some wariness among traders about the potential for a correction.
At Friday’s six-month high of $1,790 an ounce, the December contract on the Comex division of the New York Mercantile Exchange had gained 12% since the mid-August low. The ramp-up was fueled first by expectations that the Federal Open Market Committee would extend quantitative easing, with more gains occurring when the Fed exceeded expectations by announcing open-ended purchases of mortgage-backed securities without specifying an ending date.
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Throw in recently announced plans for European Central Bank and Bank of Japan bond buying and gold-market participants see potential for future gains on worries such as inflation and currency debasement. Against this backdrop, the metals added to recent gains this week.
Aside from profit-taking, he continued, the stimulus programs remain a supportive influence for gold. Further, traders will continue monitoring geopolitical developments in the Middle East and North Africa, as well as any developments in the European sovereign-debt situation, with reports Friday suggesting Spain and the European Union were working toward plans to trigger European Central Bank purchases of Spanish debt.
Should gold maintain its momentum higher, Lusk added, there is potential to trigger pre-placed buy orders—referred to as stops–if the market takes out its previous highs for the year. The highest price so far for the December contract in 2012 was $1,800.90 back on Feb. 29.
Analysts look for a quieter news week, barring surprise developments in the European debt crisis or any Middle East tensions. Key U.S. economic reports on the calendar next week include the consumer confidence index on Tuesday, new-home sales Wednesday, then weekly jobless claims, durable-goods orders and gross domestic product on Thursday. Next Friday brings personal income and spending, the Chicago Purchasing Managers Index and Thomson Reuters/University of Michigan consumer sentiment index.
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.
Major Economic Events for the week of September 17-21, 2012 actual v. forecast for Euro, GPB, the Franc, and USD
Rightmove House Price Index (MoM)
NY Empire State Manufacturing Index
Core CPI (YoY)
German ZEW Economic Sentiment
ZEW Economic Sentiment
TIC Net Long-Term Transactions
Existing Home Sales
French Manufacturing PMI
German Manufacturing PMI
Retail Sales (MoM)
Retail Sales (YoY)
Spanish 10-Year Obligation Auction
CBI Industrial Trends Orders
Initial Jobless Claims
Continuing Jobless Claims
Philadelphia Fed Manufacturing Index
Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD
Government Bond Auction
Date Time Country
Sep 24 09:10 Norway
Sep 24 09:30 Germany
Sep 24 10:00 Belgium
Sep 24 15:30 Italy
Sep 25 08:30 Holland
Sep 25 08:30 Spain
Sep 25 09:10 Italy
Sep 25 14:30 UK
Sep 25 17:00 US
Sep 26 09:10 Italy
Sep 26 09:10 Sweden
Sep 26 09:00 Germany
Sep 26 14:30 Sweden
Sep 26 17:00 US
Sep 27 00:30 Japan
Sep 27 09:10 Italy
Sep 27 17:00 US
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.comView all of FX Empire Analyst - Barry Norman's Articles