Friday, February 28, 2014

weekly gold

The safe haven properties remain intact as the recent weak data and the political conflict in the Ukraine supported the Gold.  The inflows of ETF Gold holdings are up 4.5 tons in February so far.  Now the physical side of Gold may be weakened by the Chinese buyers standing aside as the price of Gold increases.  With the slack data out of China showing a bit of a slowdown, they may be absent from the Gold market for a period of time.  They are bargain hunters looking for lower price action.    There is hope that the Indian tariffs on Gold imports will lift soon but for now 10 % duties remain.  China became the biggest buyer of Gold in 2013 consuming about 1,066 tons according to the World Gold Council.  Gold imports from Hong Kong by China were about 83.6 metric tons in January.  The increase in the futures prices may have impeded the physical bullion sales this month.  The US Mint reported that 24,500 ounces have been sold this month compared to 91,500 ounces in January.  Gold dipped in 2013 increasing the demand to 3,756.1 tons or about $170 billion US.    Of this, about 386.6 tons of Gold were purchased by the central banks.  Last year only seven of the top forty central banks had replenished their reserves.  The appetite for Gold has not waned and as a safe-haven product, the shift in allocations to the metal may be sooner than we think.   

The GDP report today showed the US expansion at 2.4 % annual rate while the last one had been 3.2%, but the market sentiment responded well again viewing the harsh weather conditions across the US.  The inclement weather conditions have blanketed the US with unusually cold weather patterns that kept consumers homebound.  This affected car sales, retail sales,  home sales and the labor conditions in general.  The weakened data is regarded temporary to date, but when the conditions clear, the true state of the economy will be reflected.  Consumer spending which makes up about 70 % of the GDP has been weak, yet US Fed Chairperson Janet Yellen attributes the recent weak data to the inclement weather conditions covering the US.  US Fed Chairperson Janet Yellen states that it may take months to truly evaluate the data to determine the true strength/weakness of the US economy. Her comments may have been construed to prepare for a potential pause on the tapering progress.  So far, we have reduced the $85 billion monthly Bond purchases to $65 billion.  Her accommodative stance may have to evaluate the true nature of the employment data.  These reports are primarily surveys and may not reflect the jobless individuals that simply may have given up and retired or the younger individuals that may have moved back home and go back to school.  Yellen states that “The recovery in the labor market is far from complete”!  What could possibly weaken this market more than anything could be slack data from China as the huge economy is often regarded as the leader in the global recovery. China has seen a contraction in manufacturing with about $4.8 trillion in shadow banking debt to address. Australia looks to the Chinese economy as the trade relations remain strong between the two countries.  Actually, the trade relationships  across the globe give the global economy a fragility much like a snowball effect.  China is still viewed as a major power, but weakness can still impact the marketplace when assumed strength declines. The next policy meeting takes place March 18th and 19th.  Yellen is known as one of the architects of the quantitative easing program that was instituted by the previous Chairman Ben Bernanke.  The January Unemployment Report came in under expectations at 113,000 again attributing the harsh weather conditions for the shortfall!  The December jobs report only produced 74,000 new jobs, so really the increase shows some recovery.  Slow and steady may be the pace and this marketplace wants to see “WOW” numbers.  If next month’s Employment Report shows any substantial decrease, then perhaps the Fed may reconsider the tapering plans.  For now, it looks as though the Fed will remain on course with plans to taper the quantitative easing program by $10 billion each month for about the next consecutive months.  The US is in expansion or a growth phase regardless of the size.  While reducing the stimulus, the market sentiment will remain vulnerable to tapering too quickly with a soft economy.  We have the US Employment numbers out the following Friday, so the Fed should keep busy with their evaluations. 

Today’s Gross Domestic Product for Q4p:2013 Real GDP change was 2.4 % while the previous reading was 3.3 %.  The GDP Price Index was 1.6 % while the previous reading was 1.3 %.  The Chicago PMI for February was 59.8 while the previous reading was 59.6.  US Pending Home Sales for January was 95.0 up 0.1 % while the previous reading was down -8.7 % to 92.4.  The Consumer Sentiment for February was 81.6 while the previous reading was 81.2.  The US Jobless Claims for the week of February 22nd were up 14,000 to 348,000 while the previous reading was 336,000.  The Continuing Claims were up 8,000 to 2.964 million.  The Durable Goods New Orders for January were -1.0 % while the previous reading was -4.3 %.  The Durable Goods Orders excluding transportation were 1.1 % while the previous reading was -1.6 %.  The Kansas City Fed Manufacturing Index for February was 4 while the previous reading was 5.   Bloomberg Consumer Comfort Index for February was -28.6 while the previous reading was -30.6.  The New Home Sales for January level was 468,000 while the previous reading was 414,000.  The New Home Sales seem to gain traction while the existing home sales remain slack.  Definitely a bright outlook for home builders.    The MBA Purchase Applications for the week of February 21st Composite was -8.5 % while the previous reading was -4.1 %.  The Purchase Index was -4.0 % while the previous reading was -6.0 %.  The Refinance Index was -11.0 % while the previous reading was -3.0 %.  The Richmond Fed Manufacturing Index Level change for February was -6 while the previous reading was 12.  The ICSC-Goldman Store Sales for the week of February 22nd was -0.6 % while the previous reading was 2.5 %.  The Redbook Store Sales for the week of February 22nd was 2.9 % while the previous reading was 3.2 %.  The FHFA House Price Index for December was 0.8 % while the previous reading was 0.1 %.  The S&P Case-Shiller HPI for November  20-city SA was 0.8 % while the previous reading was 0.9 %.  The 20-city NSA  was -0.1 % while the previous reading was -0.1 % unchanged.  The Consumer Confidence for February was 78.1 while the previous reading was 80.7.    The State Street Investor Confidence Index for February was 123.0 while the previous reading was 114.4.  The PMI Services Flash for February was 52.7  while the previous reading was 56.6.  The Chicago Fed National Activity Index for January was -0.39 while the previous reading was 0.16.  The Dallas Fed Manufacturing Survey Business Activity Index for February was 0.3 while the previous reading was 3.8. The Production Index was 10.8 while the previous reading was 7.1.  The last US Unemployment came in a meager 113,000 new jobs created for the month of January while the previous reading was 74,000.  Traders again managed to blame the light numbers on freezing weather conditions sweeping across the US.  The Unemployment Rate came in at 6.6 % while the previous reading was 6.7 %.  The Manufacturing Payrolls were 21,000 while the previous reading was 9,000.  The Private Sector Payrolls were 142,000 while the previous reading was 87,000.  The Government Payrolls was -29,000 while the previous reading was -13,000.  The Federal Government Payrolls was -12,000 while the previous reading was -2,000.  The Service Sector Payrolls was 66,000 while the previous reading was 77,000.  Temporary help agencies increased by 8,100.   The Average Hourly Earnings was $24.21 + 6 cents.  The Average Work Week Hours was 34.4 unchanged.  Next Friday, we look forward to the next Employment Report.
 
The Gold (April) contract must remain above $1316.20 to maintain the uptrend. Next week looks to be a potential retracement time for the Gold market. We could potentially retrace to $1250.00. It seems as though traders have gotten into the pattern of shorting the Gold on the rallies which may keep it capped for the short-term. Longer-term projections are extremely positive. The recovery is fragile and the Fed may have used their last bullet. Should they run out of poor weather excuses they may go back to the stimulus, cease the tapering or simply watch the slackened data which is all positive for Gold.     

  Gold Chart 

 

 

 

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weekly gold

The safe haven properties remain intact as the recent weak data and the political conflict in the Ukraine supported the Gold.  The inflows of ETF Gold holdings are up 4.5 tons in February so far.  Now the physical side of Gold may be weakened by the Chinese buyers standing aside as the price of Gold increases.  With the slack data out of China showing a bit of a slowdown, they may be absent from the Gold market for a period of time.  They are bargain hunters looking for lower price action.    There is hope that the Indian tariffs on Gold imports will lift soon but for now 10 % duties remain.  China became the biggest buyer of Gold in 2013 consuming about 1,066 tons according to the World Gold Council.  Gold imports from Hong Kong by China were about 83.6 metric tons in January.  The increase in the futures prices may have impeded the physical bullion sales this month.  The US Mint reported that 24,500 ounces have been sold this month compared to 91,500 ounces in January.  Gold dipped in 2013 increasing the demand to 3,756.1 tons or about $170 billion US.    Of this, about 386.6 tons of Gold were purchased by the central banks.  Last year only seven of the top forty central banks had replenished their reserves.  The appetite for Gold has not waned and as a safe-haven product, the shift in allocations to the metal may be sooner than we think.   

The GDP report today showed the US expansion at 2.4 % annual rate while the last one had been 3.2%, but the market sentiment responded well again viewing the harsh weather conditions across the US.  The inclement weather conditions have blanketed the US with unusually cold weather patterns that kept consumers homebound.  This affected car sales, retail sales,  home sales and the labor conditions in general.  The weakened data is regarded temporary to date, but when the conditions clear, the true state of the economy will be reflected.  Consumer spending which makes up about 70 % of the GDP has been weak, yet US Fed Chairperson Janet Yellen attributes the recent weak data to the inclement weather conditions covering the US.  US Fed Chairperson Janet Yellen states that it may take months to truly evaluate the data to determine the true strength/weakness of the US economy. Her comments may have been construed to prepare for a potential pause on the tapering progress.  So far, we have reduced the $85 billion monthly Bond purchases to $65 billion.  Her accommodative stance may have to evaluate the true nature of the employment data.  These reports are primarily surveys and may not reflect the jobless individuals that simply may have given up and retired or the younger individuals that may have moved back home and go back to school.  Yellen states that “The recovery in the labor market is far from complete”!  What could possibly weaken this market more than anything could be slack data from China as the huge economy is often regarded as the leader in the global recovery. China has seen a contraction in manufacturing with about $4.8 trillion in shadow banking debt to address. Australia looks to the Chinese economy as the trade relations remain strong between the two countries.  Actually, the trade relationships  across the globe give the global economy a fragility much like a snowball effect.  China is still viewed as a major power, but weakness can still impact the marketplace when assumed strength declines. The next policy meeting takes place March 18th and 19th.  Yellen is known as one of the architects of the quantitative easing program that was instituted by the previous Chairman Ben Bernanke.  The January Unemployment Report came in under expectations at 113,000 again attributing the harsh weather conditions for the shortfall!  The December jobs report only produced 74,000 new jobs, so really the increase shows some recovery.  Slow and steady may be the pace and this marketplace wants to see “WOW” numbers.  If next month’s Employment Report shows any substantial decrease, then perhaps the Fed may reconsider the tapering plans.  For now, it looks as though the Fed will remain on course with plans to taper the quantitative easing program by $10 billion each month for about the next consecutive months.  The US is in expansion or a growth phase regardless of the size.  While reducing the stimulus, the market sentiment will remain vulnerable to tapering too quickly with a soft economy.  We have the US Employment numbers out the following Friday, so the Fed should keep busy with their evaluations. 

Today’s Gross Domestic Product for Q4p:2013 Real GDP change was 2.4 % while the previous reading was 3.3 %.  The GDP Price Index was 1.6 % while the previous reading was 1.3 %.  The Chicago PMI for February was 59.8 while the previous reading was 59.6.  US Pending Home Sales for January was 95.0 up 0.1 % while the previous reading was down -8.7 % to 92.4.  The Consumer Sentiment for February was 81.6 while the previous reading was 81.2.  The US Jobless Claims for the week of February 22nd were up 14,000 to 348,000 while the previous reading was 336,000.  The Continuing Claims were up 8,000 to 2.964 million.  The Durable Goods New Orders for January were -1.0 % while the previous reading was -4.3 %.  The Durable Goods Orders excluding transportation were 1.1 % while the previous reading was -1.6 %.  The Kansas City Fed Manufacturing Index for February was 4 while the previous reading was 5.   Bloomberg Consumer Comfort Index for February was -28.6 while the previous reading was -30.6.  The New Home Sales for January level was 468,000 while the previous reading was 414,000.  The New Home Sales seem to gain traction while the existing home sales remain slack.  Definitely a bright outlook for home builders.    The MBA Purchase Applications for the week of February 21st Composite was -8.5 % while the previous reading was -4.1 %.  The Purchase Index was -4.0 % while the previous reading was -6.0 %.  The Refinance Index was -11.0 % while the previous reading was -3.0 %.  The Richmond Fed Manufacturing Index Level change for February was -6 while the previous reading was 12.  The ICSC-Goldman Store Sales for the week of February 22nd was -0.6 % while the previous reading was 2.5 %.  The Redbook Store Sales for the week of February 22nd was 2.9 % while the previous reading was 3.2 %.  The FHFA House Price Index for December was 0.8 % while the previous reading was 0.1 %.  The S&P Case-Shiller HPI for November  20-city SA was 0.8 % while the previous reading was 0.9 %.  The 20-city NSA  was -0.1 % while the previous reading was -0.1 % unchanged.  The Consumer Confidence for February was 78.1 while the previous reading was 80.7.    The State Street Investor Confidence Index for February was 123.0 while the previous reading was 114.4.  The PMI Services Flash for February was 52.7  while the previous reading was 56.6.  The Chicago Fed National Activity Index for January was -0.39 while the previous reading was 0.16.  The Dallas Fed Manufacturing Survey Business Activity Index for February was 0.3 while the previous reading was 3.8. The Production Index was 10.8 while the previous reading was 7.1.  The last US Unemployment came in a meager 113,000 new jobs created for the month of January while the previous reading was 74,000.  Traders again managed to blame the light numbers on freezing weather conditions sweeping across the US.  The Unemployment Rate came in at 6.6 % while the previous reading was 6.7 %.  The Manufacturing Payrolls were 21,000 while the previous reading was 9,000.  The Private Sector Payrolls were 142,000 while the previous reading was 87,000.  The Government Payrolls was -29,000 while the previous reading was -13,000.  The Federal Government Payrolls was -12,000 while the previous reading was -2,000.  The Service Sector Payrolls was 66,000 while the previous reading was 77,000.  Temporary help agencies increased by 8,100.   The Average Hourly Earnings was $24.21 + 6 cents.  The Average Work Week Hours was 34.4 unchanged.  Next Friday, we look forward to the next Employment Report.
 
The Gold (April) contract must remain above $1316.20 to maintain the uptrend. Next week looks to be a potential retracement time for the Gold market. We could potentially retrace to $1250.00. It seems as though traders have gotten into the pattern of shorting the Gold on the rallies which may keep it capped for the short-term. Longer-term projections are extremely positive. The recovery is fragile and the Fed may have used their last bullet. Should they run out of poor weather excuses they may go back to the stimulus, cease the tapering or simply watch the slackened data which is all positive for Gold.     

  Gold Chart 

 

 

 


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Saturday, February 22, 2014

The weekly gold

Gold got a boost today on the disappointing housing numbers!  The worse the economy, the better for Gold.  The harsh weather conditions have been the scapegoat again for the lackluster data.  This has been just the perfect storm with Gold as the Governments come in to devalue currencies and change their policies favoring some more than others.  The G-20 meets this weekend to discuss the global economy and the threats from contagion fears, Fed action, increased debt and inflation to name some topics.  Treasury yields may also affect the Gold as the correlations kick in. US Federal Chairman Janet Yellen maintains the accommodative stance with the dual mandate of full employment and returning inflation.  Gold thrives on inflation, so her attempts to achieve a degree of stability should include an increase in inflation.  China, with an increased usage of 32 % has risen to 1,065.8 tons of Gold,  has surpassed India with usage up 13 % to 974.8 tons of Gold according to the World Gold Council!  The import tax imposed by the Indian government has taken its toll on the inflow of the metal to India.   The jewelry in 2013 was up to 2,209 tons globally.   The total demand for Gold bullion bars and coins increased to 1,654 tons in 2013.  The central banks increased their Gold reserves in the fourth quarter by 61 tons.   Investor outflows of the ETP's last year equaled 869.1 tons.  The US Mint sold about 13,000 ounces of the American Eagle Gold coins in February while January there were sales totaling 91,500 ounces.   

 The National Association of Realtors reported that home sales slackened by 5.1 % to an annual rate of 4.62 million units in January!  The soft numbers again were rationalized as again due to the freezing weather conditions covering the US last month.  The NAR had also reported the average price of used homes up 10.7 % to $188,900  in January.  This could be due to reduced inventories on the market.  Credit is still tight and mortgage rates have increased again discouraging the buyer from pursuing home search.  The inventory was up a bit from the previous month 2.2 %.    When spring does pop, housing is expected to really make a come-back.  It is just too early to tell just how promising it may be from this vantage point.   This is so far regarded temporary and expectations for expansion still override the sentiment.  The Fed minutes were read this week and traders still were looking for signs of Fed action on the rather weak data that has the global marketplace wondering.  The tapering seems to be on course as stated regardless of the soft data.  The International Monetary Fund states that the global recovery is weak “and significant downside risks remain”.  The G-20 meets February 22nd and 23rd in Sydney, Australia.  It is anticipated that the Fed may have to defend the stimulus interjections and then again the “tapering” perhaps as well.  The IMF has concerns regarding deflation with both stimulus and tapering creating erratic market conditions.  The IMF also regards volatility as a possible threat to the economic recovery.   The trick question is how much of the weak data was really caused by the freezing temperatures?  Once the weather conditions can no longer be held accountable for the poor numbers, we will again look to the Fed for their “accommodative policy”.   The modest expectations allow any meager positive earnings to be viewed optimistically.    The US has been told the same thing continuously by the Federal Reserve about the double mandate of Labor and Inflation and Fed Chairman Janet Yellen re-iterated those same words and the market responded positively to the stable consistent outlook.  She spoke in her first semi-annual monetary policy testimony before the House Financial Services Committee in Washington this week.  She wishes to continue the current monetary policy to taper in measured steps but with no pre-set course but rather contingent on labor and inflation.  She has found unemployment to be elevated but considers the harsh weather conditions that have blanketed the US as a negative factor.  She must really look at next month’s unemployment report to really be able to determine if it is a true case or impacted by temporary conditions.   The Fed will remain accommodative and the market should continue to rally on the stability.  It seems that the marketplace will anticipate a pause in the tapering if the numbers remain soft past the harsh weather conditions.  The next policy meeting takes place March 18th and 19th.  She is known as one of the architects of the quantitative easing program that was instituted by the previous Chairman Ben Bernanke.  The January Unemployment Report came in under expectations at 113,000 again attributing the harsh weather conditions for the shortfall!  The December jobs report only produced 74,000 new jobs, so really the increase shows some recovery.  Slow and steady may be the pace and this marketplace wants to see “WOW” numbers.  If next month’s Unemployment Report shows any substantial decrease, then perhaps the Fed will reconsider the tapering plans.  For now, it looks as though the Fed will remain on course with plans to taper the quantitative easing program by $10 billion each month for about the next consecutive six months.  The US is in expansion or a growth phase regardless of the size.     The Senate had not been able to come up with the vote for a bill to renew expired benefits for the long-term unemployed which may be a setback for the economy as a whole.  It is thought that over 1.3 million US citizens lost their benefits and more may add to the figure as time passes.   It is thought that many baby boomers have simply backed away from the jobs scene to retire.   The Trade Gap had expanded 12 % to about $38.7 billion perhaps attributed to decreased exports.   Lawmakers vote to suspend raising the debt ceiling until March 2015 for the $16.7 trillion cap on borrowing.  It is thought that a US default could lead to a severe economic downturn. House of Representatives Speaker John Boehner has suggested that while raising the debt limit that the jobs and economy should also be dealt with.  The budget deficit according to the Congressional Budget Office is projected at about $514 billion.  Projections continue that the debt should continue to fall further in the future years.  The forecast for the US economy may still be bumpy for the next few years.  There is also debate whether to raise the minimum wage which would take about 900,000 people above the poverty level, but would annihilate about 500,000 jobs by 2016.   While reducing the stimulus, the market sentiment will remain vulnerable to tapering too quickly with a soft economy.

The Existing Home Sales for January were 4.62 million down 5.1 % while the previous reading was 4.870 million.  US Jobless Claims for the week of February 15th were down 3,000 to 336,000 while the previous reading was 339,000.  The Continued Claims were up 37,000  to 2.981 million with a one-week lag time.  The Consumer Price Index for January was 0.1 % while the previous reading was 0.3 %.  The CPI excluding food and energy was 0.1 % while the previous reading was unchanged.  The PMI Manufacturing Index Flash for February was 56.7  while the previous reading was 53.7.  The Philadelphia Fed Survey for February was -6.3 while the previous reading was 9.4.  The Bloomberg Consumer Comfort Index for February was -30.6 while the previous reading was -30.7.  The Leading Indicators for January were 0.3 % while the previous reading was 0.1 %.  The Fed Balance Sheet for the week of February 19th was $29.8 billion Total Assets while the previous reading was $10.2 billion.  The Reserve Bank Credit was $35.5 billion while the previous reading was $10.5 billion.  The Money Supply for the week of February 10th was $41.3 billion while the previous reading was $14.9 billion.  US Housing Starts for January were at 0.880 million while the previous reading was 0.999 million.  The Housing Permits for January were 0.937 million while the previous reading was 0.986 million.   The MBA Purchase Applications Composite for the week of February 14th was -4.1 % while the previous reading was -2.0 %.  The Purchase Index was -6.0 % while the previous reading was -5.0 %.  The Refinance Index was -3.0 % while the previous reading was -0.2 %.  The ICSC-Goldman Store Sales for the week of February 15th were 2.5 % while the previous reading was -0.3 %.    The Redbook Store Sales for the week of February 15th was 3.2 % while the previous reading was 2.8 %.  The FOMC minutes came out citing the debate on tapering but still quite vague regarding employment.  The Empire State Manufacturing Survey General Business Conditions Level for February was 4.48 while the previous reading was 12.51.  The Treasury International Capital Foreign Demand for Long-Term US Securities for December was -$45.9 billion  while the previous reading was -$29.3 billion.  The Housing Market Index for February was 46 while the previous reading was 56.  The E-Commerce Retail Sales for Q4:2013 was 3.4 % while the previous reading was 3.6 %.  Industrial Production for December was -0.3 % while the previous reading was 0.3 %.  The Capacity Utilization Rate was 78.5 % while the previous reading was 79.2 %.  The Manufacturing was -0.8 % while the previous reading was 0.4 %.  Export Prices for January were 0.2 % while the previous reading was 0.4 %.  The Import Prices were 0.1 % while the previous reading was 0.0 %.    Consumer Sentiment Index for February was 81.2  while the previous reading was unchanged.  The US Unemployment came in a meager 113,000 new jobs created for the month of January while the previous reading was 74,000.  Traders again managed to blame the light numbers on freezing weather conditions sweeping across the US.  The Unemployment Rate came in at 6.6 % while the previous reading was 6.7 %.  The Manufacturing Payrolls were 21,000 while the previous reading was 9,000.  The Private Sector Payrolls were 142,000 while the previous reading was 87,000.  The Government Payrolls was -29,000 while the previous reading was -13,000.  The Federal Government Payrolls was -12,000 while the previous reading was -2,000.  The Service Sector Payrolls was 66,000 while the previous reading was 77,000.  Temporary help agencies increased by 8,100.   The Average Hourly Earnings was $24.21 + 6 cents.  The Average Work Week Hours was 34.4 unchanged.  
 

We trended higher this week as soft data just spurred the allocations toward the Gold!  If the April Gold contract can stay above $1280.30, we have support.   $1360.50 may be a near-term target.  This could be another ploy to excite traders about the bullish sentiment, but traders may began to sell at $1360.50 and/or $1390.50.   We may remain cautiously bullish for the moment.   One must be cautious as traders have found that they love to sell a bounce.  Any possible moves to the upside may be temporary.  
 

  Gold Chart 

 

 

  Take a close look and feel free to call in and talk to me in greater detail.  It would be my pleasure.  Good trading!


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Saturday, February 8, 2014

The Weekly Gold


Gold got a boost today on the disappointing jobs numbers!  The worse the economy, the better for Gold.  The harsh weather conditions have been the scapegoat again for the lackluster data.  This has been just the perfect storm with Gold as the Governments come in to devalue currencies and change their policies favoring some more than others.  Treasury yields may also affect the Gold as the correlations kick in.  The Chinese data that perhaps was the trigger for this recent move up in Gold may have been the Flash Markit/HSBC Purchasing Managers Index (PMI) which decreased to 49.6.  Readings under 50 point to contraction.  The Chinese have been major buyers of the Gold and this may even increase the interest in buying the physical metal.  The Chinese New Year began today which may also affect the Gold sales in China.  Everything virtually comes to a halt at this time.  China has surpassed India as buyers of Gold jewelry in 2013.   India's Government has imposed restrictions to impede Gold imports and encourage currency purchases to strengthen the Rupee.  As of 2013, China purchased about 1,158 tons of Gold from Hong Kong.  The lower the price for Gold, the more the demand in China.  The reduction in mining may help boost the Gold.    The UK’s Royal Mint has increased demand on the Sovereign Gold coins to where there were waiting lists for inventory.  The US Mint sold 91,500 ounces last month.  The physical metal remains in strong demand, but there is a separation there.  The paper Gold products remain under some pressure as previous market action dictates caution and vigilance in determining the Fed’s actions.  The worst the economy, the better for Gold.   The ETF's have had outflows of about 900 tons of Gold backed products.  During this economic cycle, inflation may come to pass giving Gold some major support.    

Today’s January Unemployment Report came in again under expectations at 113,000 blaming the harsh weather conditions for the shortfall!  The December jobs report only produced 74,000 new jobs, so really the increase shows some recovery.  Slow and steady may be the pace and this marketplace wants to see “WOW” numbers.  If next month’s Unemployment Report shows any substantial decrease, then perhaps the Fed will reconsider the tapering plans.  For now, it looks as though the Fed will remain on course with plans to taper the quantitative easing program by $10 billion each month for about the next consecutive six months.  The US is in expansion or a growth phase regardless of the size.   Manufacturing came in weak and consumer spending could be better.  The weather conditions sweeping over the US have been to blame for some of the poor data and earnings.  The Senate had not been able to come up with the vote for a bill to renew expired benefits for the long-term unemployed which may be a setback for the economy as a whole.  It is thought that over 1.3 million US citizens lost their benefits and more may add to the figure as time passes.  The Trade Gap had expanded 12 % to about $38.7 billion perhaps attributed to decreased exports.    The next shoe to drop could potentially be the debt ceiling $16.7 trillion cap on borrowing which had been previously postponed until today.  It is thought that a US default could lead to a severe economic downturn. House of Representatives Speaker John Boehner has suggested that while raising the debt limit that the jobs and economy should also be dealt with.  The budget deficit according to the Congressional Budget Office is projected at about $514 billion.  Projections continue that the debt should continue to fall further in the future years.  The forecast for the US economy may still be bumpy for the next few years.   This is the Chinese Lunar New Year holiday where the volume simply may be light.  When the volume is thinner, it takes less to move the market.   China and Russia are experiencing slowdowns.  The Equities and the VIX may also have an inverse relationship.  This will be a matter of how far the bulls may go to defend their positioning.  The US economy still has strength, but it is tested by the data and the earnings reported.  The pick-up in demand boosted exports and investments.   The Euro Zone banks are still paying back the loans accumulated during this crisis period.  The European Central Bank is expected to keep rates unchanged when they meet Thursday.  The Euro FX has enjoyed the safe-haven status as of late keeping the currency fairly stable.  The strength in the US Dollar may keep the Euro FX capped.    The European Central Bank President (ECB) Mario Draghi states that he will support the economy giving the Euro FX some traction.   He may wish to address the issue of interest rates next month when he has more data.  Some major analysts have predictions regarding the valuation of the currencies in the long-term.  It is true that the US and others have printed their currency to stabilize the economies, but for time being the US Dollar should remain stable.  The contagion risks that began at the onset of this crisis remain and could still affect the marketplace.

Today’s US Unemployment came in a meager 113,000 new jobs created for the month of January while the previous reading was 74,000.  Traders again managed to blame the light numbers on freezing weather conditions sweeping across the US.  The Unemployment Rate came in at 6.6 % while the previous reading was 6.7 %.  The Manufacturing Payrolls were 21,000 while the previous reading was 9,000.  The Private Sector Payrolls were 142,000 while the previous reading was 87,000.  The Government Payrolls was -29,000 while the previous reading was -13,000.  The Federal Government Payrolls was -12,000 while the previous reading was -2,000.  The Service Sector Payrolls was 66,000 while the previous reading was 77,000.  Temporary help agencies increased by 8,100.   The Average Hourly Earnings was $24.21 + 6 cents.  The Average Work Week Hours was 34.4 unchanged.  Consumer Credit for December was $18.8 billion to $3.1 trillion while the previous reading was $12.3 billion.  The Revolving Credit (credit cards…) increased by $5 billion.  The Non-Revolving Credit  (student loans, auto loans…) increased by $13.8 billion.  The US Initial Jobless Claims for the week of February 1st was down 20,000 to 331,000.   Continuing Claims were increased 15,000 to 2.964 million.    The Challenger Job-cut Report for announced layoffs in January was 45,107 while the previous reading was 30,623.   The Gallup US Payroll to Population for January was 42.0 while the previous reading was 42.9.  Productivity in the Non-farm sector was 3.2 % while the previous reading was 3.0 %.  The Unit Labor and Costs was -1.6 % while the previous reading was -1.4 %.  Chain Store Sales are showing significant weakness compared to Decembers.    The International Trade Balance Level for December was -$36.7 billion while the previous reading was -$34.3 billion.    The Bloomberg Consumer Confidence Index Level for February was -33.1 while the previous reading was -31.8.  The ADP Employment Report for January was 175,000 while the previous reading was 238,000.  The Gallup US Job Creation Index was 19 while the previous reading was unchanged.  The ISM Non-Manufacturing Composite Index for January was 54.0 while the previous reading was 53.0.  Any number over 50 points to expansion.    The MBA Purchase Applications for the week of January 31st Composite Index was 0.4 % while the previous reading was -0.2 %.  The Purchase Index was -4.0 % while the previous reading was 2.0 %.    The Refinance Index was 3.0 % while the previous reading was -2.0 %.  The Factory Orders for December were -1.5 % while the previous reading was 1.8 %.  Redbook Store Sales for the week of February 1st was 2.7 % while the previous reading was 3.2 %.  The ICSC-Goldman Store Sales were 0.3 % while the previous reading was 0.2 %.  The Gallup US Economic Confidence Index (ECI) for January was - 16 while the previous reading had been -19.  The ISM Manufacturing Index for January was 51.3 while the previous reading was 57.0.  The PMI Manufacturing Index for January was 53.7 while the previous reading was 55.0.  Construction Spending for December was 0.1 % while the previous reading was 1.0 %.  The Gallup US Consumer Spending Measure for February 3rd was $78 while the previous reading was $96.  Motor Vehicle Sales for January for was  down 3.1 % to 1,011,188.  Bad weather was again held as the culprit for the decreased sales.  Ford Motor sales decreased 7.1 % to 154,644 units.  Ford increased incentives by 14.6 % from last year according to TruCar.   GM sales decreased 11.9 % to 171,486 units.  Chrysler increased 8 % to 127,183 units.  
 

If the April Gold contract can penetrate $1275.20, it may have a short-term trend higher.  Support should be maintained at $1235.50.  $1330.00 may be a near-term target.  We may remain cautiously bullish for the moment.   One must be cautious as traders have found that they love to sell a bounce.  Any possible moves to the upside may be temporary. 

  Gold Chart 

  

  Take a close look and feel free to call in and talk to me in greater detail.  It would be my pleasure.  Good trading!

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