Saturday, January 4, 2014

The Weekly Gold

The April Gold has been pummeled last year stripping it of its luster, but 2014 may have a different look!  Two things that remain the same through time are: bargain hunting and potential inflation.  These two ingredients could potentially feed the Gold market.  Of course, the April Gold must get through $1260.00 to confirm momentum.  The chart looks promising, but must continue momentum otherwise this may just be another selling opportunity.  The markets should begin their natural cycles.   Gold has definitely not had a bright 2013.  Long-term projections may still be extremely good regarding Gold as inflation should follow as a part of the recovery.  Boom to bust, the markets will follow the same pathways with some differences in the details.   For now, Gold holdings in the SPDR Gold Trust (NAR:GLD) has decreased by about 40 %.  India has blocked imported Gold by their import tax increases, but have recently lightened up on them.  China has increased their Gold products by about 30 % to 996.3 metric tons for the year ending September 30th according to the World Gold Council.  India has increased their Gold holdings by 24 % to about 977.6 metric tons according to the World Gold Council.    Rebalancing could be another factor creating the bounce in Gold, not to be trusted as a support for the market.    

There has been a great deal of exhilaration over the healing economy and the projected growth going forward.  US Chairman Ben Bernanke regales us with his expectations and reasoning for his accommodative policies.  The Fed will begin reducing their $85 billion a month bond buying program to $75 billion beginning this month.  The program will be contingent on the US economy showing expansion.  If the economy strengthens and the unemployment decreases as projected, interest rates will be the focus.   Inflation and higher interest rates should increase along with the expansion.   Bernanke has been considered well-versed and a critic of the Great Depression.  He has been determined that his tenure would show a successful detour away from a depression.  He steps down from his post on January 31st leaving it to Janet Yellen, who has also been pro-active on the recovery.  The next Fed meeting is scheduled for January 28th and 29th.  Expectations call for a continuation of the $10 billion reduction of purchases by the Fed.    Auto sales have been disappointing as they are considered the strength and precursor for the consumer sales and expansion in the US.  The weather was to blame with below zero winds swept across the nation keeping shoppers from shopping.  The US Auto Sales have risen by 7.6 % to 15.6 million in 2013.  Jeep sales did rise 34 % to 53,275 in December.  Ford sales had declined to 9.3 % last month.  The sales still are promising, so much, that companies have reduced the incentives.    Tuesday, US President Barack Obama is scheduled to speak on unemployment benefits extension that may affect about 1.3 million Americans.   The International Monetary Fund (IMF) President Christine Lagarde stated that the IMF will increase the projected growth of the US in 2014 from 2.6 %.  The real GDP did not disappoint at 4.1 %!   The GDP is made up of about 70 % consumer spending  and is one of the broadest measures of estimates for the US economy covering about every sector.   While the US growth looks extremely promising, the jobs outlook in the Euro Zone seems to pause.  Next week, January 7 and 8, US  Treasury Secretary Lew will meet with Euro Zone officials to discuss economic growth, deflation and the banking system.  The global health is part of the expansion of the US.   Euro Zone manufacturing has picked up in Germany and Italy.  The Markit Euro Zone PMI increased to 52.7 in December from the previous 51.6.  Germany's PMI increased to 54.3 from 52.7.  Manufacturing slowed in France and Britain.  The PMI in China decreased to 50.5 from a low average of 51.0. 

Motor Vehicle Sales for December (Domestic) were 11.9 million while the previous reading was 12.8 million.  The Total Vehicle Sales were at 15.4 million while the previous reading was 16.4 million.  The reports were disappointing and attributed to the cold weather conditions across  the US.  Auto Sales has been a strong spot for the American economy often leading the way for other consumer sales.  About 70 % of the GDP represents consumer sales.  Fears of potentially higher interest rates could be a factor though.  The Construction Spending for November was 1.0 % while the previous reading was -0.3 %.    The ISM Manufacturing Index for December was 57.0 while the previous reading was 57.3.  Factories seem to be buoyed by stronger auto sales.  Bloomberg Consumer Comfort Index for December was -28.7 while the previous reading was -27.4.  The PMI Manufacturing Index for December was 55.0 while the previous reading was 54.7.    The Initial Jobless Claims for the week of December 28th were down 2,000 to 339,000 while the previous reading was 338,000.   The Gallup US Job Creation Index for today was 19 while the previous reading was 20.  The ICSC-Goldman Store Sales for the week of December 28th came in at 1.0 % while the previous reading was 1.4 %.  The Redbook Sales were 4.5 % while the previous reading was 3.9 %.  The S&P Case-Shiller HPI for October 20 city SA was 1.0 % unchanged.  The 20 city NSA was 0.2 % while the previous reading was 0.7 %.  The Chicago PMI for December was 59.1 while the previous reading was 63.0.   The Consumer Confidence for December was 78.1 while the previous reading was 70.4.  The State Street Investor Confidence Index for December was 95.9 while the previous reading was 91.3.  The Pending Home Sales Level for November was at 101.7 while the previous reading was 102.1.    This was up 0.2 % from last month's -0.6 %.  The Dallas Fed Manufacturing Survey Business activity index for December was 3.1 while the previous reading was 1.9.  The Production Index was 7.1 while the previous reading was 16.9.  Farm Prices for December were -2.2 % while the previous reading was -3.2 %.  The last GDP for Q3 2013 was a true testament to recovery as real GDP was 4.1 % while the previous reading was 3.6 %.  The GDP Price Index was 2.0 % unchanged.  The last US Nonfarm Payrolls for November was at 203,000 while the previous reading was 204,000.  The Unemployment rate was 7.0 % while the last report was 7.3 %.  The Average Hourly Earnings were 0.2 % while the previous reading was 0.1 %.   The Average Workweek was 34.5 hours while the previous reading was 34.4 hours.  Private Payrolls was 196,000 while the previous reading was 212,000.  The Personal Income for October was -0.1 % while the previous reading was 0.5 %.  The Consumer Spending was 0.3 % while the previous reading was 0.2 %.     Next week will be all about Friday's unemployment report.  Expectations are high for the Fed to continue the plans to taper. 

Seasonally, this would be the time for the Gold market to rally, but for now the market may simply range trade between $1260.00 and $1187.00.   If it can break through $1260.00, it may be able to continue with momentum.  Traders need to confirm that this is a trend before they will risk the trade.  If the market cannot penetrate the $1260.00 level, then we could see some range trading.  $1260.00 is your focus!    The good thing is that the fear and anxiety with the uncertainty is out of the bag so everything could move on and take its natural course.   While  the bounces may be appealing, they may only be places to short.  Approach with caution!  

April Gold Chart 



No comments:

Post a Comment