Gold Traders Fear Rate Increase

A Gold Moment: August 21, 2014

 

Gold Market Expert, Carlos Perez-Santalla

Carlos Perez-Santalla

Moral suasion is one of the Fed’s most powerful tools. Gold traders and money managers are so hungry for a return to higher rates that the simple mention of the potential in the FOMC minutes was enough for a strong market reaction.  Gold prices began slipping earlier in the week, along with other commodities, on the strength of the USD. This strength came from the positive economic reports bolstering the trust in Fed actions. As the release of the minutes approached, this confidence grew and set the tone for stronger US equities with less need of a safe haven. Higher rates are in such high demand that just talk of them gets market participation. Traders now look forward to any new policy statements coming from Janet Yellen or any other central bankers in Jackson Hole Wyoming.

 

The geopolitical picture is still in the backs of trader’s minds. As long as they remain isolated to their geography the effect on money flows is expected to be limited. This is with one exception. That is the growing economic sanction war between the west and the Russians. These moves are believed to have impact as time marches on. Until that impact is better understood, markets will trade with disregard.

 

Technically, bears rule the roost. Prices triggered a wave of sell stops this morning hitting the target of 1271 sooner than expected. Short term charts are now oversold as spot gold dropped too far too fast. Upside resistance sits at 1288, 1292 and 1300. The more likely downside numbers are 1272, 1266 and 1258.

 

 Last                       GCZ4

1281

SIU4

1937

PLV4

1421

PAU4

878

 

 

 

ETF: GLD Deposits:   800.08   tonnes   +0.89

Comex GC O.I. :  366,401    -1501

ETF: SLV Deposits:  10,272.89  tonnes     +44.87

Comex SI O.I.:  164,893   -159

 

GC/EU                                  967

GC/SI                                    66.19

PL/GC                                   1.1106

GC/WTI                                13.83

 

 

 

Carlos Perez-Santalla

Gold Steady Ahead of FOMC Minutes

A Gold Moment: August 20, 2014

 

Gold Market Expert, Carlos Perez-Santalla

Carlos Perez-Santalla

Prices in gold were fairly tame yesterday despite the nearly one directional move. Gold slipped as the US economic measures confirmed what equity traders were thinking. That is the perception that everything is under control. This view also seems to be a belief that under control is a positive economy. So the USD firmed, the stock markets firmed and gold slipped after CPI and Housing Starts were released. FOMC minutes will be released today. An expectation of certainty from the committee should be seen.

 

The trouble in Ukraine seems to be fizzling again as Putin and the Ukraine president plan to meet. The Gaza situation has erupted again and the ISIS crisis has been tamed for now. These three geopolitical hotspots have limited influence on the gold price as market disruption from any of them seems unlikely.

 

Technically, consolidation still reigns, but tentatively. A close today above 1298 could easily send gold back into the 1314 region, but a close below 1292 has the ability to trigger a wave of sell stops with a target of 1271 over the next week. On the way down support should be found at 1288, 1281 and 1278. In the meantime, sideways action is expected.

 

 Last                       GCZ4

1297

SIU4

1946

PLV4

1433

PAU4

872

 

 

 

ETF: GLD Deposits:   799.19   tonnes   +1.50

Comex GC O.I. :  367,902    -1182

ETF: SLV Deposits:  10,228.12  tonnes     unch

Comex SI O.I.:  165,052   -601

 

GC/EU                                  974

GC/SI                                    66.58

PL/GC                                   1.1073

GC/WTI                                13.90

 

 

 

Carlos Perez-Santalla

Gold Attracts Buyers Despite Firm Equities

A Gold Moment: August 19, 2014

 

Gold Market Expert, Carlos Perez-Santalla

Carlos Perez-Santalla

Weakness in gold pricing yesterday seems to be continued market perception of a healthy US economy.  The NAHB housing market index reflects an optimism that hasn’t been seen since the start of the year.  This number usually passes with a few mentions, but yesterday it helped trigger a boost in the equities market reflected with a new high close in the NASDAQ index. Generally money managers will drop out of gold positions as equities climb. Day traders certainly expected more selling to come in, but not many expected fund managers to add to their GLD ETF holdings. This happened for the first time in four weeks.

 

The geopolitical picture is back to in the containment view. The trouble in Ukraine, ISIS and Gaza have not affected money flows in the way that had traders worried last week. The Russians have been doing their best to keep attention on a possibility of increased sanction wars. Another escalation may be more economically sensitive than previous sanctions simply because it increases the losses.

 

The economic picture gets a bit more clarity soon as the US CPI and US Housing starts are released. CPI is expected 2% with the core at 1.9%. The housing starts are expected to read 970K.

 

China is stepping up its effort to bring the pricing of gold to its shores by inviting three more foreign banks to import the metal into Shanghai. It is just a footnote at the moment, but this may be reflecting a change in gold trading as growing regulatory hurdles make the trading environment more challenging.

 

Technically, consolidation continues to reign. An upswing is possible to the recent 1308-1310 level with short term charts reflecting strength from over-sold levels. 1296-1292 should still have buyers lurking.

 

 Last                       GCZ4

1303

SIU4

1969

PLV4

1449

PAU4

897

 

 

 

ETF: GLD Deposits:   797.69   tonnes   +2.09

Comex GC O.I. :  369,084    -3116

ETF: SLV Deposits:  10,228.12  tonnes     +126.83

Comex SI O.I.:  165,653   +2403

 

GC/EU                                  973

GC/SI                                    66.21

PL/GC                                   1.1130

GC/WTI                                13.82

 

 

 

Carlos Perez-Santalla

Gold Bears Give the Downside a Push

A Gold Moment: August 18, 2014

Gold Market Expert, Carlos Perez-Santalla

Carlos Perez-Santalla

Trading in gold prices was full of surprises on Friday. A sell off started after 2Q British GDP had a better than expected reading. From that point the pre-weekend trading began to take on a tone of liquidation. Next US PPI readings reflected a firm economic status confirming the trend. The NY Fed manufacturing index was ignored as a regional anomaly with economists trying to see the positive from the bad reading. The price of gold didn’t seem to have many fans as the price tested the low-1290s when the TIC flows measure was released. On its own it probably would only have slowed the price slide, but at about the same time news reports of Ukraine firing on the Russian convoy broke. This began the a recovery that sent day trading shorts to run for cover. The final news item to affect the price action was the Michigan consumer sentiment showed a weaker reading than most had expected.

The trouble in Ukraine did not turn into a full battle with the Russians and leaders are attempting to hammer out a peace plan in Berlin. Whatever the outcome of these meetings, a full scale war should not be one of them.

This week brings some sensitive US economic numbers for gold traders. Tomorrow we will see the CPI reading and Housing Starts. Wednesday will see the release of the FOMC minutes from the July meeting. Thursday will bring the weekly jobless number and existing home sales. All these numbers will be out before Janet Yellen makes her Jackson Hole debut as the Fed Chair. Certainly enough data for money managers to reassess their positions.

 

Technically, bears gave up a strong foothold when prices overextended in the short term during Friday’s sell-off. The picture is mixed now with the wide summertime consolidation range of 1284-1322 holding steady. Short erm charts favor a test of the 1300-1310 level that had been a stable price for more than a week.

 

 Last                       GCZ4

1303

SIU4

1957

PLV4

1455

PAU4

900

 

 

 

ETF: GLD Deposits:   795.60   tonnes   unch

Comex GC O.I. :  372,200    +1996

ETF: SLV Deposits:  10,132.62  tonnes     unch

Comex SI O.I.:  163,250   +1322

 

GC/EU                                  973

GC/SI                                    66.50

PL/GC                                   1.1150

GC/WTI                                13.81

 

 

 

Carlos Perez-Santalla

Gold Sideways Still Eyeing Rates

A Gold Moment: August 15, 2014

Gold Market Expert, Carlos Perez-Santalla

Carlos Perez-Santalla

Gold prices continue in the low volume and lower volatility of the summer mode this week seems to be in. After the wave of headlines showing lower economic activity throughout the world, the yellow metal is holding in what may become an even lower real interest rate environment.

The Iraqi PM has finally stepped down.  His inability to lead his people and protect their lands had made the ISIS crisis so challenging. Now hope lies with the cooperation the new PM will get and the idea that he is willing to push those insurgents back. He may get stronger support from Obama as the US seems to be getting threats from the organization as well.

The wave of US economic numbers coming out soon may add to some discussions as the US TIC number will have more weight than the rest. Expect the weekend to start not long after the market finds a comfortable level after these releases.

 

Technically, consolidation rules. Bears continue to have a technical upper hand, but a minor one. A close today above the recent resistance of 1322 could wipe away any downside hopes for a while. 1302 continues to be a strong bargain hunter’s lair with 1296 not far behind it.

 

 Last                       GCZ4

1306

SIU4

1968

PLV4

1456

PAU4

880

 

 

 

ETF: GLD Deposits:   795.60   tonnes   unch

Comex GC O.I. :  370,204    +2090

ETF: SLV Deposits:  10,132.62  tonnes     +31.33

Comex SI O.I.:  161,928   +3709

 

GC/EU                                  980

GC/SI                                    66.10

PL/GC                                   1.1151

GC/WTI                                13.71

 

 

 

Carlos Perez-Santalla

Gold Steady with Weak Economies

A Gold Moment : August 14, 2014

Gold Market Expert, Carlos Perez-Santalla

Carlos Perez-Santalla

Gold traders are no longer tied to their TV screens waiting to see what happens with the Russian convoy on its way to Ukraine. There have been a slew of economic and gold market headlines that may take some time to digest. Starting with China, new numbers are raising fears that the growth machine that country has been is struggling to keep pace. Next the Japanese economy contracted deeply after a sales tax affected the public spending habit. This, of course, has happened at a time the BOJ has been working to expand the monetary base. Then the European economy is showing signs of weakness. Specifically, the German and French economies seem to be contracting. All these measures are more surprising because of their central bank’s efforts to ease monetary constraints for the purpose of growth. The European economic struggle is key as the trouble in Ukraine will be putting more strains on trade as it continues.

 

Then there is Marcus Grubb’s report from the World Gold Council of the 2Q gold demand trends.  On its face it sounds bearish as demand is reported as lower, but upon further inspection the report is neutral at best. The report reiterates what the market has been kenly focused on with Chinese and Indian demand dropping. The Chinese fall in demand had been attributed to the end of leveraged loan schemes that the government squashed and the Indian story remains with the import restrictions. At the same time, this report confirms that central banks have continued accumulating gold for their reserves. In fact the YoY comparison shows a 28% increase from this sector.

 

With volumes on the Comex contract continuing below a 30 day average, it seems that “summer doldrums” are certainly here. With real economic information flowing, this will not last long.

 

Technically, momentum currently favors bears, but the downside is littered with strong moving averages and support that has been tested a dew times over the past five months. Support begins 1305 and 1301 then moves to 1296, 1292 and 1284. The upside has met 1317 twice this week. Above that 1322 waits with 1332 and 1336 behind them.

 

 

 Last                       GCZ4

1312

SIU4

1986

PLV4

1467

PAU4

879

 

 

 

ETF: GLD Deposits:   795.60   tonnes   -0.26

Comex GC O.I. :  368,114    +4530

ETF: SLV Deposits:  10,101.29  tonnes     unch

Comex SI O.I.:  158,219   +1188

 

GC/EU                                  979

GC/SI                                    66.08

PL/GC                                   1.1203

GC/WTI                                13.47

 

 

 

Carlos Perez-Santalla

Gold Weakens Along with Oil

A Gold Moment: August 13, 2014

 

Gold Market Expert, Carlos Perez-Santalla

Carlos Perez-Santalla

The gold market knows where its bread is buttered. Yesterday saw US Treasury rates move up slightly. This was a change in direction from last week’s slow decline. Along with the tic up in rates, oil prices fell yesterday giving gold bulls reason to worry. Early yesterday gold trading was dominated by bulls, but by the end of the day, it shifted back into its natural neutral to bearish stance.

 

The geopolitical situations remain hot spots. These continue to be economically isolated. As long as they don’t affect trade, gold will not react. The trouble in Ukraine has the potential to affect trade as the sanctions remain and may escalate. The ISIS crisis has not affected oil trade and will likely remain that way. Money managers are ready to react to news relating to these issues, but are positioned for the status quo.

 

Technically, bulls needed a close above 1315 to trigger another up leg. Failure of spot gold to stay above the 40dma(1311) yesterday turns that into resistance.  1305, 1301 and 1296 should find bargain hunters while 1311, 1317 and 1322 will find sellers. Momentum currently favors bears.

 

 

 Last                       GCZ4

1309

SIU4

1995

PLV4

1473

PAU4

882

 

 

 

ETF: GLD Deposits:   795.86   tonnes   unch

Comex GC O.I. :  363,584    -625

ETF: SLV Deposits:  10,101.29  tonnes     unch

Comex SI O.I.:  157,031   -1066

 

GC/EU                                  979

GC/SI                                    65.61

PL/GC                                   1.1253

GC/WTI                                13.45

 

 

 

Carlos Perez-Santalla

Gold Rests Ahead of Treasury Auction

A Gold Moment: August 12, 2014

Gold Market Expert, Carlos Perez-Santalla

Carlos Perez-Santalla

It was a day of rest for gold traders. A day without any economic or geopolitical news headlines limited the risk traders took for the day. Prices remained flat bringing the term “summer doldrums” to the forefront for many. The impressive part of gold remaining flat is that it happened despite strength in the US stock market and the USD. This could easily be chalked up to the trouble in Ukraine and the tension with ISIS as those are the biggest hot spots in the world. Or, it could be the tension in US Treasuries that has given gold its breath.

 

Technically, it won’t take much to trigger another leg higher. A close today for spot gold above 1315 should trigger some buy stops. With many of the moving averages sitting below current prices, the downside is loaded with support levels. The 40dma of 1310, may give traders a sense of market sentiment on a closing basis. Support and resistance will clearly remain between 1296-1322 for now.

 

 

 Last                       GCZ4

1313

SIU4

2008

PLV4

1473

PAU4

880

 

 

 

ETF: GLD Deposits:   795.86   tonnes   unch

Comex GC O.I. :  364,209    -3536

ETF: SLV Deposits:  10,101.29  tonnes     unch

Comex SI O.I.:  158,097   -512

 

GC/EU                                  983

GC/SI                                    65.49

PL/GC                                   1.1219

GC/WTI                                13.51

 

 

 

Carlos Perez-Santalla

Gold Watches Rates as Battles Rage On

A Gold Moment: August 11, 2014

Gold Market Expert, Carlos Perez-Santalla

Carlos Perez-Santalla

Gold traders are hungry for action. When the headlines begin to seem mundane or less risky, prices begin to retreat. This attitude kept gold prices from getting a boost from any pre-weekend buyers. It may seem that the trouble in Ukraine and the challenges with ISIS are prosaic, but they are real. If or when these stories begin to affect world trade and money flows, they wont seem so humdrum anymore.

 

The US stock market also took the same cues as it saw a recovery going into the weekend. This could have been more detrimental for gold bulls had the US10Y rate not dipped.   Later this week will bring the US retail sales and PPI measures to help determine whether real rates will continue to fall.

 

Technically, bulls remain with an upper hand as a cluster of moving averages sits below current prices. These moving averages will work as support levels until there is a break out of the recent range.  The 40dma of 1309, will work as a market vane on a closing basis. Support and resistance will clearly remain between 1294-1324 for now.

 

 

 Last                       GCZ4

1311

SIU4

2000

PLV4

1473

PAU4

864

 

 

 

ETF: GLD Deposits:   795.86   tonnes   -1.79

Comex GC O.I. :  367,745    +1219

ETF: SLV Deposits:  10,101.29  tonnes     unch

Comex SI O.I.:  158,609   +1759

 

GC/EU                                  977

GC/SI                                    65.85

PL/GC                                   1.1220

GC/WTI                                13.42

 

 

 

Carlos Perez-Santalla

Gold Price Moves with Obama Strikes

A Gold Moment: August 8, 2014

Gold Market Expert, Carlos Perez-Santalla

Carlos Perez-Santalla

Gold traders must have a measure of gladness that Obama has thrown his hat in the ring of headlines. Otherwise trading would be as boring as the sideways consolidation seen most of yesterday. Now with this new variable, positions ahead of the weekend are likely to lean towards the bullish side. This move surprised many traders whose positions assumed that the US stance would continue as it has been this year with lots of talk and little action. This little bit of flexing muscles from the US might just slow down the regional fights. It will more than likely stop ISIS from moving further into Iraq.

 

This story along with the continued trouble in Ukraine, where Russia is said to be amassing troops again, will be supportive for the gold market.

 

The results of last week’s US Employment report continue to put pressure on rates as money managers continue to argue the results. The earliest a rate hike is believed to be possible still stands as six months away with a majority looking at the second half of next year. Both are too far away to affect the yellow metal’s price in the present.

 

Technically, bulls still have control, albeit tenuously. A close today is needed to remain above 1306 for stability to dominate. Some profit taking could occur as a failure to break the 1324 resistance yesterday invites a few liquidators to take their chips off the table.

 

 

 Last                       GCZ4

1311

SIU4

1994

PLV4

1478

PAU4

857

 

 

 

ETF: GLD Deposits:   797.65   tonnes   unch

Comex GC O.I. :  366,526    +6184

ETF: SLV Deposits:  10,101.29  tonnes     +67.16

Comex SI O.I.:  156,850   -728

 

GC/EU                                  979

GC/SI                                    65.60

PL/GC                                   1.1263

GC/WTI                                13.48

 

 

 

Carlos Perez-Santalla