Gold

The strengthening dollar is cutting into demand for gold as the dollar reached a two week high against the euro. The correlation between gold and dollars has been very high as of late and will probably continue to follow the movements in the euro-dollar. In spite of recent dollar strength, I still see gold going to $1,100.
 
Point of concern for gold from a demand point of view: Indian imports, the world’s biggest buyer, probably fell for the fifth month in a row during September as the price of gold is keeping jewelers from buying. India has imported less since April and imports last month were 21.8 tons compared with 98 tons a year earlier. In spite of this, I don’t believe gold is trading based on supply / demand, but more technicals and fear.
 
The fear is dying down now, quotes from the G20 say that inflation is not an issue in the near future.. but gold keeps on going up, it hit $1000 again today
 
The soft dollar will continue to support gold prices and will be the driving force for further increases in gold. In the event there is an improving economy, then inflation concerns should drive investors into gold. In the event the economy takes a turn for the worse, then a flight to safety and a risk-free commodity will drive investors into gold. Gold is headed for its biggest three month gain in 6 quarters, so I would expect a consolidation period prior to another extended breakout. I am still long gold at these prices.
 
Friday’s weekly CFTC update:
Speculative long positions outnumbered short positions by 231,386 contracts, down 5,363.
Miners, producers, jewelers and other commercial users were net short 275,234, down 12,376 contracts.
No huge change, so I interpret it to reflect no change in the expectation of the price of gold.
 
Was reading that Deutsche Bank's Macro Strategy Group recommended emerging-market assets, high-yield bonds and gold as likely to benefit from a "global sweet spot" of economic recovery and central-bank liquidity, which it called "the perfect mix for a range of risky assets." The group sees gold going to $1,100 an ounce.
 
Gold continues to rally, hitting a spot record high of $1,043.80, probably less as a hedge against inflation and more as a store of a wealth and protection from the weakening dollar. Gold probably will have trouble breaking $1,050, but once it does, we should see it going to $1,100.
 
Jim Rodgers says gold may go to $2,000 an ounce in the next decade. Assuming it will take 10 year for this to happen and using $1,000 as the current base price – that would generate a compound return of about 7% annually. Bill Gross is estimating that stocks will generate 5% over the long run. An allocation to gold is a good investment at this time.
 
Dollar strength and the recent rally in gold may be causing some investors to sell gold, but with the ease at which it is going through these psychological round barriers, I’m still buying on every dip. Hedge funds increased their net long positions in the week ended Oct 6 according to USCFTC data.
 
Investors Pare Back USD Shorts Ahead Of Major Risk Events
News and Events:

A very light data calendar from Europe coupled with the Columbus Day holiday in the US means it is likely we're in for another day where FX markets drift around in tandem with broader indicators of risk appetite, namely equity indices and commodity prices. Asian equity markets have been mixed since the open with the Hang Seng and Shanghai Composite struggling (Nikkei closed for Japan holiday), but commodity markets have remained supported with gold consolidating just below $1050, silver still elevated at $17.75, and oil holding above $72. The US earnings calendar is very sparse today, with the main US financial names due from Wednesday, however the first few releases from Europe are kicking off this morning, and we expect most to follow the positive start set last week. The few data releases of note this morning have been Swedish Unemployment data and German Wholesale Price Index (Sep); the latter was sharply lower than forecasts at -0.2% MoM (vs. 0.3% expected); affirming the ECB's view that for now, inflations risks are not a concern. The Swedish unemployment figures showed a slight improvement for Sep (5.3% vs. 5.4% expected), echoing the recent NOK, CAD and AUD labour data that have also shown an encouraging and unexpected improvement in the labour market. The remainder of the week is packed with high-profile risk events including FOMC Minutes, US Retail Sales and Industrial Production, Eurozone CPI, UK CPI and Retail Sales amongst others. With short-USD positions performing so well last week it is unsurprising that we are seeing some profit-taking ahead of the big risk events; the DXY has bounced well off its lows last week, currently trading at 76.60. One of the biggest movers in the majors has been NZDUSD, down a percent at 0.7265 as the USD resurgence reclaims ground and investors pare back risk ahead of tonight's NZ Retail Sales figures. Consensus estimates are for a 0.5% gain in Aug, but considering its major peers including Australia (0.9% vs. 0.5% exp.), US (2.7% vs. 1.9% exp.) and Eurozone (-0.2% vs. -0.5% exp.) have all convincingly beaten estimates in August, the risks appear to be tilted to the upside in our view.[actionforex]

"P&F GOLD1 Box Size 50X4 or(0.19%) HI/LO
Data 1056.87 - 1043.63 ~ 0 Month ~ 3.64 Day
Database 2192 records 1051.78 (Last Close)
2009-10-08 20~07
2009-10-12 11~29
(GMT+01:00) Paris
BJF Trading Group"

1057.00|~5O|||________________________________________________________________|-0.01%|1.28%
1056.50|~1OO||__x_o_x_________________________________________________________|0.04%|1.23%
1056.00|~15O||__x_o_x_o_______________________________________________________|0.08%|1.19%
1055.50|~2OO||__x_o_x_o_______________________________________________________|0.13%|1.14%
1055.00|~25O||__x___x_o_______________________________________________________|0.18%|1.09%
1054.50|~3OO||__x_____o_______________________________________________________|0.22%|1.04%
1054.00|~35O||o_x_____o_______________________________________________________|0.27%|0.99%
1053.50|~4OO||o_x_____o_______________________________________________________|0.32%|0.95%
1053.00|~45O||o_x_____o_______________________________________________________|0.37%|0.9%
1052.50|~5OO||o_______o_____________________________________________x_________|0.41%|0.85%
1052.00|~55O||========o=========================x===================x=o=====x=|0.46%|0.8%
1051.50|~6OO||________o_________________________x_o_________________x_o_____x_|0.51%|0.75%
1051.00|~65O||________o_________________________x_o_____x___________x_o_____x_|0.56%|0.71%
1050.50|~7OO||________o_________x___________x___x_o_x___x_o_________x_o_x___x_|0.6%|0.66%
1050.00|~75O||________o_________x_o_x_______x_o_x_o_x_o_x_o_________x_o_x_o_x_|0.65%|0.61%
1049.50|~8OO||________o_________x_o_x_o_x___x_o_x_o_x_o_x_o_________x_o_x_o_x_|0.7%|0.56%
1049.00|~85O||________o_x_______x_o_x_o_x_o_x_o_x_o_x_o_x_o_________x_o_x_o_x_|0.74%|0.51%
1048.50|~9OO||________o_x_o_____x_o_x_o_x_o_x_o_x_o_x_o___o_x_______x_o_x_o_x_|0.79%|0.47%
1048.00|~95O||________o_x_o_____x_o___o_x_o_x_o_x_o_x_____o_x_o_x___x_o_x_o___|0.84%|0.42%
1047.50|~1OOO|________o_x_o_____x_____o___o_x_o_x_o_x_____o_x_o_x_o_x_o_x_____|0.89%|0.37%
1047.00|~1O5O|________o_x_o_____x_________o_x_o_x_o_______o_x_o_x_o_x_o_______|0.93%|0.32%
1046.50|~11OO|________o_x_o_x___x_________o___o___________o_x_o_x_o_x_________|0.98%|0.28%
1046.00|~115O|________o___o_x_o_x_________________________o_x_o___o_x_________|1.03%|0.23%
1045.50|~12OO|____________o_x_o_x_________________________o_x_____o___________|1.08%|0.18%
1045.00|~125O|____________o_x_o_x_________________________o_x_________________|1.12%|0.13%
1044.50|~13OO|____________o_x_o_x_________________________o_x_________________|1.17%|0.08%
1044.00|~135O|============o===o===========================o===================|1.22%|0.04%
1043.50|~14OO|________________________________________________________________|1.27%|-0.01%
|~145O||||||||4_8_3_4_216_105_5_135_4_5_4_6_8_8_11107_4_5_149_5_4_5_14117_5_8_
 

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