By FXEmpire.com
Analysis and Recommendations:
Gold continues to drop in today’s session, as all USD commodities tumbled as the US dollar continues to gather strength as investors worries increase. The USD and the JPY have been the benefactors of the run to safety. Gold is trading at 1594.05
Since Sundays election in France markets have begun to worry about the future of the political make up of the EU and their continued “austerity measures” as France’s Hollande is opposed to austerity, while Germany’s Merkel is a firm supporter of austerity. Hollande also was to review the “fiscal compact” that most European nations were pushed into by Merkel and then French President Sarkozy.
Simultaneously, Greece has begun to unfold. They are unable to form a government and the anti austerity groups and coalitions are becoming stronger. The EU forced the then in powered and possible new leaders of Greece to sign a document saying that they would uphold the austerity measures imposed to receive their necessary financial support, but the new face of Greek politics, were not part of that agreement. Rumors of Greece leaving the euro have been heard loudly in recent days.
While all this upset and turmoil take place, Spain is being pushed to center stage, as the banks begin to fail and borrowing costs skyrocket. Spain seems to be on the verge of financial and economic collapse.
In the meantime, demand for physical gold in Asian markets was picking up as traders hunted the advantages of weak prices. Demand due to peak marriage season in India coupled with Chinese demand also assisting the sentiments. At the same time, Investors will closely watch the US Trade balance, Consumer Price Index data and the outcome of the European Union leaders meeting on May 23rd to get proper cues on gold’s direction in the immediate run.
Watch these upcoming events closely
|
May 10 |
TBD |
CNY |
Chinese Trade Balance |
7.93B |
5.35B |
|
13:30 |
USD |
Trade Balance |
-50.0B |
-46.0B |
|
|
13:30 |
USD |
Initial Jobless Claims |
369K |
365K |
|
|
13:30 |
USD |
Continuing Jobless Claims |
3278K |
3276K |
|
|
14:30 |
USD |
Fed Chairman Bernanke Speaks |
|||
|
19:00 |
USD |
Federal Budget Balance |
30.0B |
-198.2B |
|
|
May 11 |
02:30 |
CNY |
Chinese PPI (YoY) |
-0.3% |
|
|
02:30 |
CNY |
Chinese CPI (MoM) |
0.2% |
||
|
06:30 |
CNY |
Chinese Fixed Asset Investment (YoY) |
20.9% |
||
|
06:30 |
CNY |
Chinese Industrial Production (YoY) |
11.9% |
||
|
06:30 |
CNY |
Chinese Retail Sales (YoY) |
15.2% |
||
|
13:30 |
USD |
Core PPI (MoM) |
0.3% |
||
|
13:30 |
USD |
PPI (MoM) |
0.0% |
||
|
14:55 |
USD |
Michigan Consumer Sentiment |
76.4 |
Just a heads up since gold is volatile and will react to most economic indicators we will begin to post the daily calendar with events that could affect the price of gold. The gold price is sensitive to a number of scheduled U.S. and Euro area macroeconomic announcements–including retail sales, non-farm payrolls, and inflation. Gold’s high sensitivity to real interest rates and its unique role as a safe-haven and store of value typically leads to a counter-cyclical reaction to surprise news, in contrast to their commodities. It also shows a particularly high sensitivity to negative surprises that might lead financial investors to become more risk averse.
These results have a number of implications. To reduce the uncertainty of the return on gold transactions, traders may wish to time their orders flow so as to avoid the release of information that has been shown to affect prices. For longer-term market participants, these results provide confirmation of the pro-cyclical bias of many commodities and gold’s role as a safe-haven during periods of economic uncertainty.
Click here to read Gold Technical Analysis.
Originally posted here
