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Thursday, November 7, 2013 12:26:33 PM America/Toronto
Gold prices (XAU/USD) settled slightly higher yesterday but remained within the previous day's trading range. The XAU/USD pair seems to be trying to form a bottom since the prices bounced off of the 1306.05 level which is also the 50% retracement based on the bullish run from 1251.60 to 1361.76. For a long time the gold market participants have been speculating that the Federal Reserve will begin reducing its bond-buying program and end it in 2014 if the employment outlook shows sustainable improvement (i.e. unemployment rate reaches 6.5%) and these speculations caused investors’ confidence in gold to erode. It seems the prospect that the Federal Reserve's tone will remain dovish until the spring is good for major stock exchanges but not for gold at the moment.
On the weekly, daily and 4-hour time frames, the XAU/USD pair is trading below the Ichimoku clouds and that means the outlook for gold is still tough. Although technical formation on charts suggests there is still some room for the pair to sink in the long run, intra-day traders should watch the 1306 and 1326 levels. If the bulls manage to hold prices above the 1306.05 support level, we could see a rebound towards 1326. Breaking through this resistance level might change the short-term outlook and give the bulls extra power they need to tackle the 1335.92 - 1345 zone.
Thursday, October 31, 2013 12:44:08 PM America/Toronto
Ten months into 2013, gold’s tale of woe is at this point well-documented. Despite ongoing easing by the Federal Reserve, gold prices have slid as investors have preferred stocks and other riskier assets to bullion.
At the ETF level, the SPDR Gold Shares (GLD) , which once upon a time was briefly the largest ETF in the world, is down 22% year-to-date. Two gold ETFs are found among the 10 worst ETFs in terms of 2013 outflows. [Silver ETFs Trouncing Gold Rivals]
GLD now resides 6.3% below its 200-day moving average, a landmark the ETF has not traded above since February, but the ETF is trading slightly above its 20- and 50-day lines. With gold headed toward its worst loss since 1997, gold bugs are looking for any signs of positivity even as investors continue to pulls cash from bullion-backed ETFs. [Gold ETF Outflows Accelerate in October]
Help could be on the way. Rather, a major bounce to take gold prices back to $1,500 an ounce could be on the way according to Bank of America Merrill Lynch’s Head of Global Technical Strategy MacNeil Curry.
“We have changed our view on gold from bearish to bullish. The impulsive gains from the 1251 low of Oct-15 and break of the 2m downtrend (confirmed on the break of 1330) say a medium term base and bullish turn is unfolding. We look for an ultimate break of the 1433 highs of Aug-28, with POTENTIAL for a push to 1500/1533 long term resistance,” Curry said in note to clients obtainedby CNBC.
Curry advised buying a dip to $1,309 per ounce and acknowledge his call could be wrong if gold trades down to the $1,250 area, a price point at which markets could again fret about the profitability of already downtrodden gold miners. [Gold Miners ETF: A Falling Knife]
Curry sees it next going towards $1,433 and potentially as much as $1,500 to $1,533, but a move to $1,375 an ounce could be needed as confirmation, CNBC reported. Thursday’s high for Comex gold for December delivery was $1,358.80 an ounce.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
Wednesday, October 30, 2013 3:10:33 PM America/Toronto
By Addison Wiggin | Oct 30, 2013
While the price of gold has been range-bound between $1,290–1,420 since late July, we remain on watch for evidence of what we’ve labeled “Zero Hour.” That’s the moment when a major commodities exchange runs out of gold to settle a contract and settles in cash instead — a default. At that moment, the price of physical gold in your hand runs away from “paper gold.”
As we go to press, signs of stress are in the system — especially in GLD, the giant ETF that’s a proxy for the price of gold. We’ve never much liked GLD. It has too much “counterparty risk” — the risk that whomever you’re doing business with won’t, or can’t, live up to their promises.
Among those promises is that heavy-duty moneybags investors can exchange their GLD shares for actual metal — an option not available to you, the retail investor. But now even the big boys can’t trade in their shares for the real thing. “People have tried to get their gold out of that ETF,” says John Hathaway, manager of the Tocqueville Gold Fund, “and you just can’t get it.”
Hathaway’s account is confirmed by Grant Williams, a Singapore-based hedge fund adviser. The problem? The massive imbalance between futures contracts on the New York Comex and the actual metal inventory the Comex has on hand for delivery. Williams reckons there are 55 ounces of “paper gold” for every ounce of the real thing.
“We’ve seen the gold being drained out of the Comex almost nonstop this year,” Williams recently told radio host Eric King, “certainly since the Bundesbank repatriation request. It hasn’t had any noticeable effect just yet, but it really is a spring that is continually being coiled, and at some point it is going to snap back. And when it does, with all of these disparate claims on each ounce of gold, there is going to be some fireworks, no doubt about it.”
From the start of 2013 through mid-September, Comex gold inventories plunged 36% — from 11.059 million ounces to 7.034 million. This is the West-to-East flow of gold we’ve been documenting all year in the daily 5 Min. Forecast. The gold being drained from the vaults in New York has moved to China, where both the central bank and ordinary people are loading up at prices last seen in 2010.
The drop in Comex inventory “is worth $9.66 billion at today’s prices,” writes Mark O’Byrne of the Irish gold dealer GoldCore, “meaning that a handful of billionaires or just one powerful creditor nation-state with large foreign exchange reserves, such as Russia, could corner the Comex gold market and cause a default.”
Zero Hour approacheth.
Here’s another wrinkle uncovered by the aforementioned Grant Williams. Nearby is a chart of the gold price going back three years — annotated with two specific dates.
The first one was when Venezuela’s late caudillo Hugo Chavez demanded the repatriation of 160 metric tons of gold held abroad, mostly at the Bank of England. The second was when Germany’s central bank asked for the return of 674 tons of gold from the New York Fed and the Banque de France — for which the Germans were told they’d have to wait seven years.
In both cases, “an initial move higher quickly morphed into a concerted move lower” in the gold price, writes Williams. And because Germany was asking for more than four times as much bullion as Venezuela, the move down was that much greater.
What gives? Williams is in agreement with Eric Sprott, the Canadian fund manager who helped us develop the Zero Hour scenario last February. The Western central banks have leased their gold to large commercial banks at interest rates of less than 1%, and the commercial banks have sold that gold (mostly to China), plowing the proceeds into assets earning more than 1%.
“I think the central banks have been leasing their gold out for decades to the bullion banks,” Mr. Williams writes in his free newsletter Things That Make You Go Hmmm… “and now find themselves in the rather precarious position of needing to reclaim that which they are supposed to own before the shortfall is exposed.”
The smash in the paper gold price “was specifically designed to shake out loose holders,” Williams goes on, “and it has worked to a degree, but only amongst the weaker holders of the ETFs, who tend to ‘rent’ gold rather than own it.
“I think the stronger hands have been getting their gold out of the official warehouses as fast as they can; and central banks in places like China, Russia and all over the rest of Asia and South America have been trying to buy and, crucially, to take delivery of physical gold while they still can.”
Zero Hour approacheth.
Mr. Sprott himself would agree. “The supply of gold has not gone up,” he recently told an interviewer at Mineweb. “In fact, it was down last year, I’m sure it will be down this year, I’m sure it will be down next year. So how can we have these new entrants coming into the market and buying that much gold, and the price goes down?
“It’s always been my contention that the demand for gold is well in excess of mine supply, that the Western central banks continue to supply that gold.
“I think the decline in gold was engineered here to try to spring some physical gold out of the market, which the GLD and other ETFs responded to in huge proportion. There was a dump of about 700 tons of physical gold in a six-month period. Well, that’s almost 1,400 tons a year, annualized. That’s about two-thirds of the mine production ex China, ex Russia that hit the market on an annualized basis, and yet was consumed, I might point out.”
Consider it a gift as Zero Hour approaches. You can buy metal in 2013 at 2010 prices.
Tuesday, October 8, 2013 10:47:50 AM America/Toronto
By: Shoaib-ur-Rehman Siddiqui | Monday, 07 October 2013
SINGAPORE: Spot gold is due for a sharp move, as its consolidation in a narrow range of $1,301.81-$1,323.21 could be ending.
The consolidation seems to be taking the shape of a triangle, the two trendlines of which are converging to a point. The pattern will be confirmed bullish should gold climb above $1,323.21, with an immediate target at $1,346.61.
A drop below $1,301.81 will confirm a small double-top that formed between Oct. 2 and Oct. 4, and a bearish target at $1,278 will be established.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.