Gold Analysis

Gold continues on its downside. As indicated earlier i had expected gold to continue till around 3rd quarter to weaken. Particularly during these months before the festivities of Diwali and the marriage season following it, gold has shown a tendency to weaken. Looking at the channel chart below one can see that Gold has just about neared its bottom. It might possibly touch 1050 to end the downside.

If we look at the below chart and check the retracement levels from the start in 2001-2002 when the market went into a bull run to the top made in 2011 we can see that market is still above the 50% level which makes the case for moving up for gold stronger then silver. 

If we look at the daily closing on Friday we can see a double bottom and furthermore that double bottom is with a divergence. That makes a further pull back on Wednesday once Fed meeting result is out a possibility.

Lastly one can see the chart below and a good entry point would be if the market closes above 1125 this month. That would be another signal that gold is bottoming out and unlikely to test the low of 1179 it made earlier this week. However a close below the horizontal line, and a test of 1080 or even move to  1050 cannot be ruled out.

FED Meeting Outcome - 17th June 2015

Consistent with what i have been saying, despite Ms. Janet Yellen indicating that Interest Rates would be hiked one to two times this year, the markets did not react in a dollar positive manner. Usually an interest rate hike makes the currency stronger. An anticipation of a rate hike also makes the currency stronger. This as we can see has not happened in the case of the USD yesterday, rather whole focus is on the Euro. I have been saying that the market has already played the role of a discounting mechanism as far as US interest rate hikes are concerned and will not react to interest rate hikes.

Euro on the other hand is the major focus of the market. Today the Finance Minsters of Europe meet up to decide the fate of Greece. In case there is a default on the part of Greece then this would be the first default on an IMF loan by a first world country. Great Article on this in the telegraph of today...
http://www.telegraph.co.uk/finance/economics/11682277/Greeks-admit-they-will-default-at-the-end-of-the-month-as-central-bank-turns-on-government.html

One must also look at the crosses since yesterdays movements were good on the GBP as well as the YEN. Both moved considerably more then other counters. Gold also reacted well to yesterdays events.

I would look at 1.1180 as a buy in EUR/USD.
GBP/USD still has a long way to go but might take a breather for now.
USD/JPY is a good short.
USD/INR - i expect USD/INR to continue to remain weak. Anywhere above 64.50 can start to short USD/INR which is likely to continue to strengthen throughout out this to the next year.

Will put up charts by the of this week. Waiting for more clearer direction on Crude.

Fed Meeting, Euro and Greece this week.

I do not expect much to happen in the FED meeting this week other than a possible hint at hiking rates sometimes in the near future. One must however be prepared for the inevitable as a trader. In case there is a rate hike, the US dollar will sharply gain in value against all major counters. However this strength will be short lived in my opinion, 2 to 10 days at the most.

The main focus this week is the Greek drama, which is equally important for both the Greeks as well as Euro Zone. Greece if decides to exit the Euro zone, will be isolated from the Euro zone. In addition there are concerns that China, Russia and such other ambitious emerging global powers will try to enter Greece and help it in what ever they can to further their own interests. US might also look at this as an opportunity to further its own interests in Europe. So there are geopolitical issues with the Greek default as well. Then of-course the markets are already nervous and a Greek default will affect a fragile recovery which is more difficult for Europe then for the US. Mr. Alex Tsipras knows this and is using it to his advantage.

I foresee good sense to prevail and with German and French expertise in keeping the Euro Zone intact the likelihood is that an agreement will be reached for a timely solution of the Greek Debt issue. 

Overall i would see this as a Euro favorable week. I would expect the Euro to strengthen further. I continue to see USD/YEN as a good sell opportunity. GBP/USD and EUR/USD good buys as well. 

Its worth risking on buying gold as well. Crude might take a little more time to give direction. 

WTI Crude, Gold, Silver - End of March 2015

Gold Analysis

Gold

Yesterday in the Times of India of 10th November 2013, I was reading an article by Mr. Gurcharan Das on Gold. He pointed out many factors taken by RBI (Reserve bank of India) because of which gold prices got a bit deflated and he expects gold prices to come down in the future.

In my Analysis the exact reverse is likely to happen. Despite the surprise Interest rate cut by the ECB gold held on above 1300 USD. It was only on Friday with some good numbers of Non Farm Payrolls coming from the US that Gold actually went down. I do not expect gold to go lower than 1261 this month and then to slightly recover to around 1300 levels by month end. Next month gold might try the low once again, the reason being that in January Mr. Bernanke is to leave office and in all likelihood Ms. Janet Yellen is to become the new FED Chairperson.  So, though gold usually is bullish in December and January it is likely to get bullish only in January end or beginning of February 2014. I expect gold to close around 1350 by the year end and see every dip as a buying opportunity.

Moreover with Money printing continuing gold and silver will benefit as currencies globally lose value. As far as the Non Farm Payroll numbers are concerned they are usually good during this time of the year due to approaching Christmas and new year holidays. Moreover the number is a surprise because the numbers have gone up even though there was  a US shutdown which is likely to happen again on Feb 7^th the next date for the debt limit to end.