1) GOLD TRADING
Bloomberg: Gold May Fall Below $1,700 Before Extending Bull Rally: Technical Analysis
Gold may decline to below $1,700 an ounce this month before climbing to an all-time high of $2,000 in October as the metal extends its longest rally in at least nine decades, according to technical analysts.
Gold’s jump to a record $1,921.15 an ounce on Sept. 6 pushed it to “overbought” levels and the metal may slide to $1,670 before October, said Ron William, a technical strategist at MIG Bank. Any slump may halt at $1,650 and the metal may touch $2,000 next month, Commerzbank AG said, while independent analyst Jim Stellakis sees prices staying between $1,725 and the all-time high in the coming weeks.
Bullion is set for an 11th straight annual gain, the longest winning streak since at least 1920 in London, as concern about slowing economic growth spurred investors to diversify away from equities and some currencies. Gold’s swings in the past month prompted CME Group Inc. to raise margins on Comex futures contracts, while the metal’s 10-day historical volatility is more than double the average so far this year, Bloomberg data show.
“Gold is an overcrowded trade at the moment going into the $2,000 psychological barrier,” MIG’s William said by phone from Neuchatel, Switzerland. “Such a decline would be consistent with gold’s long-term bullish cycle and provide a fantastic buying opportunity into 2012.”
Immediate-delivery gold traded at $1,845 an ounce by 3:45 p.m. in London on Sept. 9, and is up 30 percent this year, outperforming global stocks, commodities and Treasuries.
Exhausted Momentum
Prices slumped as much as 11 percent in three days after touching a then-record $1,913.50 on Aug. 23 after Tom DeMark’s TD Sequential indicator suggested price momentum had been exhausted, said William. The metal may drop as far as $1,670, which would be the ceiling of a long-term logarithmic chart, he said. Still, a sustained close above $1,934 would reduce the bullish signal, he said, referring to the DeMark strategy.
Gold has dropped on average as much as 28 percent in “large” setbacks over the past decade or so, and continued its bull run, said William. A drop of that much from its record would be about $1,383.
DeMark indicators, named after Tom DeMark who came up with the concept, are designed to identify market tops and bottoms and anticipate reversals. In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. More people may be turning to charts to help them trade. The Society of Technical Analysts in July said its membership jumped 60 percent since June 2002.
Overbought
Gold may be overbought according to tools including moving average convergence/divergence and stochastic oscillator indicators, said Stellakis, founder of Technical Alpha, a New York-based research company. While any extended drop may push prices to $1,615, which would be about half of the dollar- measured move from January through the Aug. 23 peak, projected down from the record, that wouldn’t mean the bull run is over, he said.
“Over the last couple of months this uptrend has accelerated,” Stellakis said. Based on performance since 2009, prices need to stay above $1,500 for that trend to stay intact, while the metal needs to trade above $1,620 for the accelerated uptrend since July 2010 to continue, he said.
Gold may climb to the “psychological” level of $2,000 next month, said Axel Rudolph, a technical strategist at Commerzbank in London. Any decline would be supported near the Aug. 25 low of about $1,704 and then $1,650, which may be where the 55-day moving average would be, he said. Gold will continue its bull run as long as prices stay above the July low of about $1,478, he said.
“We’ll have another crisis,” Rudolph said. “I believe gold will still be a very heavily demanded safe-haven trade.”
Source: Bloomberg www.bloomberg.com
2) GLOBAL STOCKS/EQUITIES
(Reuters) - Stock index futures pointed to a higher open for equities on Wall Street on Thursday, with futures for the S&P 500, for the Dow Jones and for the Nasdaq 100 up 0.3 to 0.5 percent...
On Wednesday, the Dow Jones industrial average .DJI was up 140.88 points, or 1.27 percent, at 11,246.73. The Standard & Poor's 500 Index .SPX was up 15.81 points, or 1.35 percent, at 1,188.68. The Nasdaq Composite Index .IXIC was up 40.40 points, or 1.60 percent, at 2,572.55. DETAILS >>>
(Reuters) - Global equities rallied and the euro rose on Wednesday as optimism over tentative steps to resolve Europe's debt crisis overcame still widespread fears that Greece will ultimately default on its debt.
Stocks on Wall Street jumped as much as more than 2 percent after Europe's top bureaucrat said plans for a common euro zone bond, seen by many as a key tool to ease the region's festering debt crisis, would soon be presented...DETAILS >>>
Source: Reuters
PUSH FOREX FORMULA
LONDON, Sept 15 (Reuters) - The euro steadied on Thursday as relief over assurances from Germany and France about keeping Greece in the euro bloc subsided, with the single currency set to stay weak on worries over whether Athens will manage to avoid a debt default.
The euro is under pressure as market players, spooked by fears that a possible debt default in the euro bloc could unleash a major financial crisis, remain ready to sell the currency and risk assets into any rally.
The euro was flat on the day at $1.3755 , off a high of $1.3784 hit on Wednesday after a joint statement from Germany and France helped bolster hopes that Greece will receive the next tranche of aid from the EU/IMF and avoid imminent default.
"The comments from Merkel and Sarkozy have supported sentiment in the short-term but not there's not much scope for a serious improvement in attitudes towards the periphery or overall growth conditions in the euro zone right now," said Manuel Oliveri, currency strategist at UBS in Zurich.
"It's also quite likely the ECB will need to take a more dovish stance so we don't think the euro will stay supported for long," he added.
The euro has been under added selling pressure since the European Central Bank was seen to be shifting away from its previous hawkish stance on monetary policy last week, with some market players seeing potential for a rate cut before year-end.
Risk-reversals, a measure of the premium required to hold a put or a call in a currency, continue to show a strong bias for euro downside, showing the market is concerned about further falls for the single currency.
"There were no new steps, so the conference call did not offer any fresh reason to buy the euro," said Masafumi Yamamoto, chief FX strategist at Barclays Capital in Tokyo, echoing widespread worries over how Greece will meet tough fiscal targets as austerity measures hurt its economy.
Many traders expect the euro to eventually test Monday's seven-month low just below $1.35, while resistance is seen at a previous support point around $1.3835 and then $1.3895, a 38.2 percent retracement of its fall this month.
The euro is also burdened by mounting worries over contagion of the debt crisis to the euro zone's bigger economies.
Speculation is rife that Moody's might downgrade its rating on Italian debt soon as it is almost 90 days since the U.S. agency said it may cut the Aa2 rating.
Also attracting attention is Spain's debt auction later in the day. Spain is expected to pay a heavy premium to borrow up to 4 billion euros via three bond issues after Italy had to pay the highest interest rates in the euro era to sell five-year debt on Tuesday.
This will be followed by an informal meeting on Friday of euro bloc finance ministers.
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3) GLOBAL MARKETS
Stocks, euro recover after slide; outlook wary
SINGAPORE, Sept 13 (Reuters) - European index futures rose and the euro edged off a seven-month low on Tuesday after a report that Italy may get financial support from China sparked a bout of short-covering but did nothing to ease fears that Europe is sliding into another banking crisis.
Asian shares staged a modest rebound, but growing expectations of a Greek debt default, sharp drops in French bank shares on Monday due to their sovereign exposure and a surge in Italian bond yields meant sentiment remained fragile and any rally was likely to be short lived.
"There are still enormous challenges facing the European system at this point and fears around a default in Greece are very high and it's hard to see that changing any time soon," said Greg Gibbs, a strategist at RBS in Sydney.
The dollar eased broadly, helping lift dollar-denominated commodities such as gold, copper and crude oil.
Euro STOXX 50 index futures STXEc1 rose 1.1 percent, and DAX FDXc1 and CAC-40 FCEc1 futures were also up more than 1 percent , while financial bookmakers called the FTSE 100 to open up as much as 1.4 percent .
In Asia, Japan's Nikkei share average rose 1 percent and Australia's benchmark index gained 0.9 percent, while MSCI's broadest index of Asia Pacific shares outside Japan was flat .
The MSCI index is nearly 20 percent below its 2011 high reached in April. A fall of 20 percent or more is the generally accepted definition of a bear market.
U.S. stocks bounced back late in Monday's session after a report that Italy could get financial support from China tempered investors' worst fears over the euro zone debt crisis.
S&P 500 index futures ESc1 were flat in Asia on Tuesday, suggesting Wall Street's gains may run out of steam.
Market sell-offs like those of the last six weeks -- driven by the euro zone crisis and fears of renewed recession in the United States -- are often punctuated by "short-covering" rallies, when traders buy to realise profits on bets that an asset would fall in price.
EURO CRISIS
The Financial Times reported that Italy had asked China to make "significant" purchases of Italian debt. Italy has seen its borrowing costs spike in recent weeks on doubts about the political will in Rome to tackle its swollen debt.
Greece warned on Monday it would run out of cash next month without the next tranche, around 8 billion euros, of a bailout loan. Euro zone policymakers have threatened to withhold the money as patience with Athens' repeated fiscal slippages wears thin.
A growing number of policymakers, as well as market economists, are convinced it is only a matter of time before Greece, which keeps falling behind on its fiscal targets after two EU/IMF bailouts, will have to default.
"The contagion impact of a default will be severe, because next in the firing line will be Italy, Spain and it will take in the whole of the European banking sector too," Suki Mann, a strategist at Societe Generale, wrote in a note.
In currency markets, the euro inched up to around $1.3670 against the dollar after falling to a seven-month low of $1.3495 in the previous session, though any signs of weak demand at an Italian bond auction later in the day may see the single currency fall back again.
"All eyes are squarely on that seven-month low around $1.35 hit overnight," said Koji Fukaya, director of global foreign exchange research at Credit Suisse Securities in Tokyo.
"The downtrend in the euro will surely continue, but my sense is that unless the Italian bond auction goes extremely badly, this level may hold today."
The dollar index, which tracks the U.S. currency against a basket of major peers, fell 0.6 percent. The weaker greenback made dollar-denominated assets cheaper for holders of other currencies. >>>> OUR RECENT TRADES HERE
Copper rose 1 percent to $8,840 a tonne and oil also gained, with U.S. crude CLc1 up 0.7 percent at $88.85 a barrel and Brent crude LCOc1 rising 0.5 percent to $112.81 , although traders remained wary.
"This is a shallow bounce because of Wall Street ending higher, so there is some confidence returning, but I don't think anybody would be putting any big positions given the global situation," said Victor Say, an analyst at Informa Global Markets in Singapore.
Gold bounced about 0.8 percent to around $1,828 an ounce, after dropping by more than 2.5 percent in the previous session, also supported by the safe-haven appeal that drove it to a record high of $1,920.30 last week.
"There is a slow-motion train wreck going on in Europe at the moment, which is going to be relatively supportive of gold," said Nick Trevethan, senior commodities strategist at ANZ.
"All the factors that have been supporting gold for the past few months are still there.
Nothing has changed." (Additional reporting by Saikat Chatterjee in Hong Kong, Ian Chua in Sydney, Antoni Slodkowski and Lisa Twaronite in Tokyo and Alejandro Barbajosa in Singapore; Editing by Kim Coghill)
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