Gold Weekly Fundamental Analysis February 13-17, 2012, Forecast

By FX Empire.com

Economic Events: (GMT)

Please check the daily forecast for details on all economic events.

Major Economic Events of the Week

Feb. 14	10:00	EUR	German ZEW Economic Sentiment
13:30	USD	Core Retail Sales (MoM)
13:30	USD	Retail Sales (MoM)
Feb. 15	07:00	EUR	German GDP (QoQ)
09:30	GBP	Claimant Count Change
10:30	GBP	BoE Inflation Report
10:30	GBP	BoE Gov King Speaks
19:00	USD	FOMC Meeting Minutes
Feb. 16	13:30	USD	Initial Jobless Claims
Feb. 17	09:00	EUR	German Ifo Business Climate Index
09:30	GBP	Retail Sales (MoM)
12:00	CAD	Core CPI (MoM)
13:30	USD	Core CPI (MoM)
13:30	USD	CPI (MoM)

Historical

High: 1916.20

Low: 1321.10

Rule:

One of the simplest ways for traders or investors to take part of this intense gold up trend is to let price action be their guide. In taking a look at the daily chart of gold, we can see numerous price action strategies that occurred in the context of this trending market that nearly all worked out as great entry points. Notice in this chart below how accurate price action can be and the frequency with which it provides high probability entry signals. By no means are we suggesting traders should have or could have taken all of these entries. But when you combine such high probability entry strategies with a sound money management plan, including a profit taking strategy, it would be very hard too not profit consistently in strongly trending markets like we are currently seeing in gold.

Gold is a bull force to be reckoned with right now, when a market is in a strong trend there will naturally be many great entry points. Price action setups can provide a plethora of accurate and non-lagging entries into such trends.

o Human discretion plays a big role in trading success, despite what internet marketers want you to believe, rigid trading “robot” and lagging indicator systems will never make you a consistently profitable trader. You need to get an education in price dynamics and “naked” price chart reading to develop your discretionary trading skills.

o There is simply no need to cloud up your charts with lagging indicators when mastering a few simple price action setups is much more accurate, effective, efficient, and stress free.

o When fundamental AND technical forces are in alignment, as with the current situation in gold, price action traders have an extremely valuable opportunity because trading with price action allows for much more accurate entries than other methods as well as providing traders with a “set and forget” style of trading when used in combination with simple risk to reward scenarios.

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 prices are on the rise again. You now buy three gold contracts. By the end of the week, each contract is up by 100 points. You make a cool $3,000 when you sell the three contracts. This way, you complete your third trade in a series of four trades.

This completes the third trade in the series of four trades. Now, you are ready for the fourth trade. You watch the market. It is moving up again. You enter with four contracts this time. You wait for a few days and the market is up by 50 points. You sell all the four contracts and make a profit of $2,000. Your total profit in this series of four trades is $6,500. This profit you made in just a matter of few weeks which is not bad. After you complete a series of four trades, you remove the profit from your account. Now, you can start all over again with a new series of four trades. The first trade in this series of four trades will always be with one contract.

This is a very simple gold trading strategy that depends on pyramiding your position with a series of four trades and removing all the profit from your account at the end of these four trades. With practice, you will find this gold trading strategy very simple and easy to implement.

• Gold reacts to uncertainity 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 opportunties when investors are taking profits, not moving out of the markets.

Analysis and Recommendations:

Gold hit a midweek high of 1753.15 and ended at 1723.95. The precious metal spent the week at the whims of investors with worried nerves over the Greek situation. Today, Greece announced that it had passed legislation to enact all of the requirements to satisfy the EU. This will be reviewed this coming week. More and more of the markets are worried that a default in inevitable, either now or down the road. The austerity package in its present form has been coerced as has the voluntary agreement with the Greek creditors.

The metal also continues to respond to every word spoken by the Fed Chairman. The Fed is scheduled this week for several statements which might effect gold.

The markets barely reacted to fundamental news in the US this week or abroad.

All eyes will be on the Federal Reserve officials to determine if the current policy is viable given the strong recent jobs reports, many Fed watchers are skeptical that the current stated policy to keep interest rates low until 2014 will in fact come to pass. Speeches Tuesday by Philadelphia Fed President and Atlanta Fed President may give insight if there is any concern within the Federal Reserve about the stated policy.

The Federal Open Market Committee also releases minutes of its Jan. 26 meeting on Wednesday, and Fed Chairman Ben Bernanke will speak at the Federal Deposit Insurance Corp. conference on community banking Thursday. (Watch gold)

Retail sales figures are due Tuesday, housing starts and Philadelphia Fed index data Thursday and consumer price index figures Friday. It will be a busy week for the USD.

The Strength

1) Initial Jobless Claims fall to 358k, 12k less than expected and the 4 week average drops to 366k, the least since May ’08
2) Job Openings in monthly BLS data rise to match the highest since Sept ’08
3) MBA said avg 30 yr mortgage rate falls to new low of 4.05% and refi’s jump 9.4%
4) German Factory Orders in Dec rise a bit more than expected
5) China’s PPI moderates to a gain of just .7% y/o/y, the slowest rate since Nov ’09
6) Indonesia unexpectedly cuts rates to 5.75% while RBA and SK sit pat

The Weakness

1) Greece on brink, AGAIN, unemployment rate in Nov hits 20.9% from 18.2% in Oct
2) German exports in Dec, the main driver of their economy, falls 4.3% m/o/m vs an expected decline of just 1%, German IP falls 3% vs est of flat from Nov
3) Euros being redeposited with the ECB overnight remain around 500b, matching the amount borrowed under the LTRO
4) BoE votes for more QE, brings asset purchase program up to 325b pounds.

Prior Weeks Economic Reports actual vs. forecast

Feb. 06	15:00	CAD	Ivey PMI	64.1	57.8	63.5
Feb. 07	03:30	AUD	Interest Rate Decision	4.25%	4.00%	4.25%
03:30	AUD	RBA Rate Statement
15:00	USD	Fed Chairman Bernanke Testifies
Feb. 08	21:45	NZD	Unemployment Rate	6.3%	6.5%	6.6%
Feb. 09	01:30	CNY	Chinese CPI (YoY)	4.5%	4.0%	4.1%
12:00	GBP	Interest Rate Decision	0.50%	0.50%	0.50%
12:45	EUR	Interest Rate Decision	1.00%	1.00%	1.00%
13:30	USD	Initial Jobless Claims	358K	370K	373K
13:30	EUR	ECB Press Conference
Feb. 10	13:30	CAD	Trade Balance	2.7B	0.7B	1.2B
13:30	USD	Trade Balance	-48.8B	-48.4B	-47.1B

Sovereign Bond Auction Schedule Feb 13-17

Feb 13 10:10 Italy BOT auction

Feb 13 10:10 Norway T-bill auction

Feb 13 10:30 Germany Eur 4.0bn Aug 2012 Bubill

Feb 13 12:00 Norway Details bond auction on Feb 20

Feb 14 09:30 Netherlands Eur 3.0bn-4.0bn Jan 2017 DSL

Feb 14 09:30 Spain 12 & 18M T-bill auction

Feb 14 10:10 Greece 3M T-bill auction

Feb 14 10:10 Italy BTP/CCTeu auction

Feb 14 10:30 Belgium Auctions 3 & 12M T-bills

Feb 15 10:10 Sweden Auctions T-bills

Feb 15 10:30 Portugal Eur 1.5-1.75bn May & Aug T-bills

Feb 16 09:30 Spain Obligacion auction

Feb 16 10.30 UK Auctions 4.5% 2034 conventional Gilt

Feb 16 10:50 France BTA/OATi auction

Feb 16 16:00 US

Announces auctions of 2Y Notes on Feb 21, 5Y Notes on Feb

22 & 7Y Notes on Feb 23

Feb 16 18:00 US Auctions 30Y TIPS

Originally posted here

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