XULF Report – 3/7

Expecting a continuation?

XULF Report

Gold’s bounce has either ran out of steam or is pausing for breath reaching a high of $1267 yesterday and has since retreated due to some profit taking. Gold bulls will be trimming down positions ahead of the ADP Non-Farms today and the all-encompassing Non-Farms on Friday as the market majority are expecting a continuation of the positive data last week. Since gold’s drop to $1179 last week we have seen a shift in market dynamics as miners cut back on production and an increase in demand in the physical market has sparked a substantial bear market rally. Barricks, the largest gold miner, has now announced it is delaying the opening of its Pascua-Lama mine till 2016 one of the reasons being the drop in gold prices therefore supply squeezes like this should offer gold a bottom support.

Yesterday price did manage to penetrate the $1261 level but the breakout only produced a mere $6 profit and the bears claimed control at $1267 before price found resistance at the Ichimoku clouds. Right now it is difficult to predict the next move on a short term basis because it is dependent on whether we are in a pullback of a rally that began last Friday or that the next leg of the long term bearish trend is assuming itself. Therefore exercise patience and wait for a pattern or strong trendline to emerge before taking a risk. In summary this 4 hour chart is manifesting some profit taking, indecision and cautiousness ahead of the Non-Farm numbers. Often during such market conditions triangle patterns can appear so keep a close eye on any developments.

Some factors for traders to be aware of at present are; the USD/JPY has crossed up above the 100 level again which isn’t good news for gold but if the bulls really do believe this market is oversold then they can overcome dollar strength because, although it may come as a surprise, the dollar accounts for approximately 15% of gold fluctuations meaning both markets can actually move in the same direction. China are currently fighting off the dark cloud of a credit crunch which could have opposing effects on gold subject to the amount of uncertainty it generates. Spain and Italy submit their services industry PMI at 08:15 and 08:45 GMT today which could give investors evidence to add to Monday’s data that there is a bottom in sight for the Eurozone’s economy. At 13:15 the US reveal the private Non-Farms which, as always, will act as a precursor to the US Labour Departments payroll number on Friday.

Market Analysis Monday 1st of July

Signs of rising demand

ANALYSIS 01-08-2013

Conditions Rally Still Happening in South Korean stocks

Positive trend occurred again in South Korea stock market. In trading Friday, the South Korean market was back in bullish trend due to the impact of a rise in U.S. stocks overnight is driven by the effect of lowering the jobless claims data for last week amounted to 7 thousand.

Technically, the index in the trading session today, Monday (01/07) is likely to strengthen, test positive trend. At the H4 chart informa bullish hammer gives an opportunity for the index to move upside. However, the volume is likely to increase, as well as an early indication of a bullish index. In addition, RSI, on the H4 chart, is in the oversold area, cue upside.

Expected, the index tested the first resistance level of 260.67 and 273.73. If it fails at 232.03, then the next index is expected to tend to retest the 232.03 support level and continue up the possibility of being in the 221.07 area.

Pound Down Under Analyst Predictions

Sterling in trade week is generally observed plainly shows weakening trend against the U.S. dollar. Trading the currency pair GBP / USD is in the range of 1.5386 after opening at the beginning of the trading week was down about -177 pips or about -1.15% and closed at around 1.5209.

Technically, the trading session today, Monday (01/07), Strerling couple of dollars likely to move in a negative trend.

Weakening Strerling primarily expected soon retest the support at 1.5025 minimum and maximum 1.4919. Meanwhile, if Strerling able to break and hold above 1.5204, then another alternative scenario Strerling the chance to test the existing Resistance 1.5313 and 1.5425 area.

Gold Rebound from Low 34 Months

Spot gold prices rebounded from 34-month lows, the biggest jump in a month, as signs of rising demand for jewelry, coins and bullion after the precious metal is headed to its biggest quarterly fall in at least 93 years old.

Technically, gold at today’s trading session, Monday (01/07) potential reversal, tested positive trend, but prone to profit taking. Indicator RSI resistance likely to re-test the bullish channel and into the area, but the Bollinger Bands are starting to shrink, thus giving impetus to gold to the downside.

Estimated gold price immediately prior to test resistance at least in the area of ​​1267.33 and re-test the maximum level of 1295.91. However, if the gold price could not break and stays below 1229.35 then estimated the price of gold has the potential to test Support the 1196.35 and 1167.78.

XULF Report – 26/06

Gold has not reacted well

XULF Report

Equity markets had been recently reacting negatively to strong US data as it implies the Fed will kick-start their stimulus exit plan into gear although yesterday saw a different and more refreshing response to such data. US Durable Goods Orders, New Home Sales and Consumer Confidence were all better than expected and showed a strengthening US economy and investors gave a moderately positive reply which could be early signs that investors can cope with the concept of stimulus withdrawal. Gold however has not reacted well. It was mentioned in yesterday’s report that this week’s data will be closely scrutinized to see whether the Fed’s intention will materialise and the latest data from the US means it is getting closer and closer.

As I write gold is still tumbling smashing through Friday’s $1269.51 low and now traders should look to trade with the trend and execute shorts on pullbacks to Fibonacci levels and/or execute as price makes new lows. Well done if you are currently in this downtrend but if you are considering the best time to exit and cash in profits either wait for a strong bullish hammer with the shadow twice as long as the body and loner than the prior candlestick. This will signal a reversal and offer a good opportunity to exit and also give traders looking to enter long. If a bullish hammer doesn’t print watch out for a higher lows on a shorter timeframe which can indicate the current trend has exhausted itself and ready to recover somewhat. Trying to buy before candlestick confirmation is like trying to a catch a falling knife so wait for a bullish hammer or higher lows showing short term trend change.

If you have missed this decline wait for price to pullback and intersect with the yellow bearish trend line shown on this 5 minute chart. If it bounces sell and if price breaks the yellow line we could see a small retracement. The horizontal red lines show today’s potential resistance levels so again look to short if price approaches them levels. On summary definitely look for shorts rather than long trades because the absence of support until we move below $1200 means the market could easily keep dropping.

Gold priced dropped to the lowest since September 2010 – 24/06 – 28/06 XULF Weekly Report

Gold tumbled badly last week after Federal Reserve Chairman Ben Bernanke said the exiting of the bond buying will begin if the current trend of economic development continues and a break below two support levels of $1338 and April’s low of $1321 exacerbated the drop. Priced dropped to $1269.51 which is the lowest since September 2010 before having a small bounce on Friday to as high as $1302.46. Bernanke’s language was similar to previous statements reiterating any slowdown will be data dependant and he refrained from giving specific timelines which makes gold’s decline feel a little overdone. However the culmination of a stimulus withdrawal getting nearer and low inflation are hitting gold hard and leaving investors little reason for holding the metal but if uncertainty is around the corner, maybe triggered by China’s slowdown or the Fed’s exit plan or both, then this may help gold fight back and limit the slide.

Due to gold’s multi-year bull market there aren’t many clear standout support levels to help a strong bounce. $1156 is the next potential support level established after a bull market pullback in May 2010 however this is not comforting for the bulls given we are about $140 away from that level. Therefore more declines are expected but this week looks like we may see a rebound before more another downward leg after Friday printed a bullish harami and the RSI has recovered to the 30 level. If the stochastic can cross back above 20 with a cross of the fast and slow lines this will add to the probability of a bounce and take into account that price is also trading on the outside of the lower Bollinger Band signalling a forthcoming correction. Target level will be the 38.2% Fibonacci Retracement level at $1315 which should deliver some resistance and if price can push pass it will find more resistance at previous support level $1321. Gold was range bound between $1338 and $1423 for over 4 weeks across May and June and any break to the upside or downside is likely to dictate sentiment for the rest of the year therefore longer term position traders should consider shorts after corrections. Of course things can change if the US economic recovery has setbacks and stimulus prevails however right now things are very bearish for gold over the long term.

This week holds a relatively busy economic agenda mainly centred on the US. On Tuesday we have New Home Sales, US House Prices and the UK’s inflation report that could indirectly affect gold by moving the GBP/USD pair. On Wednesday there is a final measure of US growth for the 1st quarter which is expected to be 2.4% so be ready to trade following any surprises there. On Thursday we have the US Weekly Jobless Claims and Pending Home Sales and Friday brings a bunch of data releases from Japan covering inflation, house prices, retail and industrial output.

Gold has taken a hammering in the last 36 hours – 21/06 XULF Report

XULF Report

Gold has taken a hammering in the last 36 hours as Federal Reserve Chief Ben Bernanke implied that if the current trend of economic progress continues the exit of stimulus will begin. Although the language used was very similar to previous statements highlighting that any slowdown is data dependent and that the Fed are not comfortable enough at present to give specific timelines which makes the battering of gold seem a little overdone. Maybe that’s why gold has surged $20 to around $1290 this morning after making a low of $1269.50.

Technically the daily chart looks oversold according to the RSI, Stochastics and the Bollinger Bands any potential bulls need to wait 24 hours after such a decline to make sure the market has stabilized on lower volatility. If today prints a mildly bullish reversal candlestick look for long opportunities on Monday and by then the aforementioned indicators will have triggered the buy signals. Be aware that this strategy is risky because it entails going against the trend and the overall bearish trend could resume itself at anytime. Therefore take profits when a bearish candlestick prints or target the 38.2% Fib retracement level at $1314. The main event today is Bank of Japan’s Governor Kuroda who is talking at a press conference at 7:45 GMT and his aim will be to reinstall confidence into the Japanese stock market by reinforcing the intent on weakening the yen and achieving 2% inflation therefore USD/JPY could have a surge and be back on track to its long term bullish trend dating back to November and this will give more power to the bears. Taking into account the fragility of gold, the oversold levels and Kuroda speaking today make sure you trade extra careful with both long and shorts because there could be sizeable moves.

Bullish trendline on the 4 hour chart resulted in a strong sell-off – XULF Report 19/06

XULF Report

As we approach the Fed’s policy statement and Bernanke’s question and answer session at the FOMC’s press conference equities have climbed higher on mounting speculation the Fed will keep the current level of bond-buying unchanged and interest rates near zero. However gold didn’t benefit and the break of the bullish trendline on the 4 hour chart resulted in a strong sell-off.

As you can see the bullish trendline break produced a sharp decline and since reaching the low of $1360.89 price has interacted with the 38.2% retracement level at $1370.20 and began another leg of the decline. The bullish hammer indicates there may be support again at $1360.89 so traders shorting need to be mindful there could be a flurry of buy orders at this level. Place a short stop at $1371 which is just above the 38.2% Fib level and last 4 hour candlestick. According to risk and reward rules profit target should be double the risk undertaken therefore target $1354 but be wary there could be a bounce at $1360. The FOMC statement followed by press conference begins at 19:00 GMT so reduce exposure before this as gold will be very volatile.

Jalatama Loco London (XULF) Report 05/06/2013

XULF Report

It feels like the bulls and bears are on a see-saw with the $1400 mark as the centre point at present making it really difficult to execute position trades. Therefore shorter term intra-day trades are more suitable until the market at large becomes more comfortable with the fact the Fed is ready to taper bond purchases and that it may be soon. It could be a volatile day for gold and equities as Prime Minister Shinzo Abe is scheduled to speak before a press conference outlining more of his growth plans including encouragement to pension funds to invest in more overseas assets which could lift equities and put pressure on gold. We also have Spanish and Italian Services PMI in the afternoon and this evening at 20:15 there is the ADP Non-Farms which is the private sector’s job report for May and is an important precursor to the all-encompassing Non-Farms this Friday.

Always use stop losses especially during potentially volatile days like today. Any trends at present seemed to be short lived so there are scalping opportunities when price either spikes or drops at a fast rate and becomes overbought or oversold. Here the RSI and the Bollinger Bands on the 15 minute chart shows the market is overbought therefore consider a short with a tight stop if a bearish candlestick prints. A stop loss above this morning’s high is an appropriate level. A break higher from this level will indicate further price gains in the short term.

The medium term bullish trendline on the 4 hour chart was pierced last night but as price closed back above the trendline it is arguable that the trend is still intact. Although it is worth reiterating that due to the volatility any trendlines may not be reliable. Medium term, due to price forming a triangle shown by the blue descending line and the medium term bullish trendline, could be determined by a breakout probably caused by one or more of today’s headline news.

Jalatama Loco London (XULF) Report 04/06/2013

XULF Report

After hovering in the $1390’s for most of yesterday gold had a surge reclaiming the $1400 mark last night spurred on by disappointing US ISM Manufacturing data that implied the Fed may postpone plans to reduce stimulus. The Fed wants to move on from the mixed bag of data at present before committing to winding down the programme which, in an odd way, means that poor economic numbers could lead to gains for equities and dollar-denominated commodities. USD/JPY dropped below the 100 yen level which also helped gold last night but given the overall fundamentals the pair are still well positioned to continue its bulls run driven by Japan’s aggressive QE plans and a buoyant stock market and the expectation that, even though there is mixed data from the US, a slowdown in stimulus is on the horizon and this will put pressure on gold in the long term.

Despite the volatility price is trading along a medium term bullish trend line on the 4 hour chart, although do bear in mind many bullish trendlines that have been drawn since $1338 level on 20th May across different timeframes have had to be redrawn because of erratic price movements therefore trade this trendline with caution. The angle on the trendline is mild enough to be sustainable however the heightened volatility signals the trend is weak. The latest 4 hour candlestick is printing as a harami offering an early sign for a short pivot trade but given the volatility consider shorter targets. The obvious target level is $1400 as there might be some buyers around this level and place a tight stop loss just above this morning’s of $1415. The medium term outlook is more bullish for gold as the 50 period MA is currently intersecting with the 100 period MA. If this crossover completes consider long trades as price bounces around the bullish trendline.

The economic highlights today are the Spanish Unemployment at 3pm and US Trade Balance at 8:30pm which is likely to impact the dollar and consequentially the gold market.