Gold Weekly Fundamental Analysis April 2-6, 2012, Forecast

Introduction: Gold prices always rise when there is uncertainty in the global economy. In times of uncertainty, wealthy 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
• 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.

 

Analysis and Recommendations:

Gold climbed again to end the month at 1669.75 surprising investors and the markets. On the 3 prior days gold had eased dropping from the high of 1699.50 and falling to 1647.05. When gold could not break through the 1700.00 price, investors thought it had lost wind and began to sell; combining with the words of Federal Reserve Chairman Bernanke, gold looked like it was going to continue downwards.

Towards the middle of the Friday, investors jumped back into the markets with the USD up and gold prices down, it was a perfect buy opportunity.

For the month, gold declined 2.3%, as it ended February at $1,711.30 an ounce.

Historical

High:     1916.20

Low:      1321.10

 

Economic Reports March 25-30, 2012 that affect the Americas actual v. forecast

 

Last week’s market highlights

The Good Stuff

• Eurozone Finance Ministers finalizes the temporary combination of the EFSF and ESM. Italy and Spain get to contribute to their own bailout fund if needed
• German unemployment falls more than expected and rate falls to lowest since reunification
• German IFO business confidence up slightly to the highest since July
• Italian business confidence up slightly from lowest since Dec ’09 and consumer confidence rises to 8 month high
• Consumer confidence rises a touch to best since Feb ’11
• Personal Spending in Feb rises .8% m/o/m, above estimates of up .6%
• UK said purchase apps rose 3.3% to a 10 week high.
• Crude finally drops but not enough

 

The Disappointing

• Inflation expectations in both the Michigan (3.9%) and Conference Board (6.3%)confidence figures rise to the highest since May,
• Chicago, Richmond, Dallas and KC manufacturing survey’s all fall more than expected in Mar from Feb
• Real income falls in Feb by .1%, savings rate drops to 3.7%, the lowest since Aug ’09
• Initial Jobless Claims 4 week avg 365k after benchmark revisions vs 355k prior
• Feb Durable Goods orders grow less than expected after Jan’s weakness
• UK said refinances fell 4.6% to lowest since early Dec
• Home price index falls to cheapest since Jan ’03
• Pending Home Sales in Feb unexpectedly falls .5% but from most since Apr ’10
• German retail sales in Feb fall for 4th month in past 5
• Shanghai index closes down for the 3rd straight week due to continued concerns with economic growth
• Bernanke Feds will do more, possible monetary easing
• Gasoline prices rise another .035 on the week to $3.93.

 

Economic Highlights of the coming week that affect the Euro, the USD and the Franc. 

 

Summary of this week’s highlights for the European and US Markets

In the United Kingdom, the March purchasing manager index for manufacturing is on tap.

The same release is due in Europe for the European Monetary Union.

EU unemployment rate data for February will also be released.

PMI construction data for March is awaited in the UK, along with the BRC shop price index for the month.

EU producer price index data is also due.

In the UK, the March purchasing manager index for services is expected to be released.

The European Central Bank will wrap up a busy day with a meeting to decide on the current level of interest rates in the currency bloc.

Industrial production data for February is due in the UK, along with manufacturing production data for the period.

NIESR will release its quarterly gross domestic product estimate for March.

Elsewhere, the Bank of England will meet to discuss the level of interest rates for March.

This week in the USA

Monday sees the release of the ISM manufacturing index for March in the US. The index is expected to have risen 1.1 points during the month to 53.5.

February construction spending data is also due.

Tuesday brings US car sales data for March, along with factory orders figures for February.

On Wednesday, the ADP employment report for March will be published in the US, alongside the ISM non-manufacturing index for the month.

The weekly Energy Information Administration petroleum status report will also be announced

In the US on Thursday, jobless claims data is awaited.

The March employment situation report is due in the US, along with consumer credit change data for February.

Economists expect the jobs data to show a 230,000 lift in private sector jobs for the month, with total non-farm payrolls lifting by 225,000, leaving the jobless rate unchanged at 8.3 per cent.

On Friday, most western markets will be closed for the Good Friday public holiday.

Government Bond Auctions this week

Apr 03  09:30  Belgium  Auctions 3 & 6M T-bills

Apr 03  09:30  UK  Conventional Gilt Auction

Apr 04  08:30  Spain  Bono auction

Apr 04  14:30  Sweden  Details T-bill auction on Apr 11

Apr 05  08:50  France  OAT auction

Apr 05  15:00  US Announces auctions 

Apr 05  15:30  Italy   Details BOT on Apr 11 & BTP/CCTeu on Apr 12