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.

Date

Last

Open

High

Low

Change %

Sep 21, 2012

1772.85

1769.15

1787.55

1768.85

0.21%

Sep 20, 2012

1769.05

1771.25

1772.35

1755.75

-0.13%

Sep 19, 2012

1771.35

1768.15

1779.25

1762.65

0.17%

Sep 18, 2012

1768.35

1760.05

1773.15

1751.95

0.46%

Sep 17, 2012

1760.25

1774.05

1776.15

1753.75

-0.77%

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

Date

Currency

Event

Actual

Forecast

Previous

Sep. 17

GBP

Rightmove House Price Index (MoM) 

-0.6%

 

-2.4%

 

USD

NY Empire State Manufacturing Index 

-10.4

-2.0

-5.8

Sep. 18

GBP

Core CPI (YoY) 

2.1%

2.2%

2.3%

 

GBP

CPI (YoY) 

2.5%

2.5%

2.6%

 

GBP

CPI (MoM) 

0.5%

0.5%

0.1%

 

EUR

German ZEW Economic Sentiment 

-18.2

-19.0

-25.5

 

EUR

ZEW Economic Sentiment 

-3.8

-16.5

-21.2

 

USD

Current Account 

-117.4B

-125.5B

-133.6B

 

USD

TIC Net Long-Term Transactions 

67.0B

45.3B

9.3B

Sep. 19  

USD

Building Permits 

0.803M

0.796M

0.811M

 

USD

Housing Starts 

0.750M

0.765M

0.733M

 

USD

Existing Home Sales 

4.82M

4.55M

4.47M

Sep. 20 

EUR

French Manufacturing PMI 

42.6

46.4

46.0

 

EUR

German Manufacturing PMI 

47.3

45.3

44.7

 

EUR

Manufacturing PMI 

46.0

45.4

45.1

 

GBP

Retail Sales (MoM) 

-0.2%

-0.4%

0.3%

 

GBP

Retail Sales (YoY) 

2.7%

2.7%

2.3%

 

EUR

Spanish 10-Year Obligation Auction 

5.666%

 

6.647%

 

GBP

CBI Industrial Trends Orders 

-8

-15

-21

 

USD

Initial Jobless Claims 

382K

375K

385K

 

USD

Continuing Jobless Claims 

3272K

3300K

3304K

 

USD

Philadelphia Fed Manufacturing Index 

-1.9

-4.0

-7.1

  

Economic Highlights of the coming week that affect the Euro, GBP, CHF and the USD

Date

Time

Currency

Event

Forecast

Previous

 Sep. 24

09:00

EUR

German Ifo Business Climate Index 

102.3

102.3

 

09:00

EUR

German Current Assessment 

110.9

111.2

 

09:00

EUR

German Business Expectations 

95.0

94.2

Sep. 25

07:00

EUR

GfK German Consumer Climate 

5.9

5.9

 

15:00

USD

CB Consumer Confidence 

62.0

60.6

Sep. 26

01:00

EUR

German CPI (MoM) 

-0.1%

0.4%

 

01:00

EUR

German CPI (YoY) 

2.0%

2.1%

 

11:00

GBP

CBI Distributive Trades Survey 

5

-3

Sep. 27 

08:55

EUR

German Unemployment Rate 

6.8%

6.8%

 

08:55

EUR

German Unemployment Change 

10K

9K

 

09:30

GBP

Current Account 

-12.4B

-11.2B

 

09:30

GBP

GDP (QoQ) 

-0.5%

-0.5%

 

09:30

GBP

GDP (YoY) 

-0.5%

-0.5%

 Sep. 28 

07:45

EUR

French Consumer Spending (MoM) 

-0.2%

0.1%

 

08:00

CHF

KOF Leading Indicators 

1.55

1.57

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

 

 

 

 

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About: FX Empire Analyst - Barry Norman

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