Euro Gold Technicals Look Near Perfect

From GoldCore

Euro Gold Technicals Look Near Perfect

Today’s AM fix was USD 1,664.25, EUR 1,325.04 and GBP 1,051.66 per ounce.

Yesterday’s AM fix was USD 1,663.50, EUR 1,325.18 and GBP 1,053.52 per ounce.

Silver is trading at $30.79/oz, €24.62/oz and £19.54/oz. Platinum is trading at $1,519.10/oz, palladium at $630.80/oz and rhodium at $1,025/oz.

Gold edged up $3.30 or 0.2% in New York yesterday and closed at $1,667.20. Silver slipped in Asia then hit a high of $30.985 in New York and finished up 0.59%.

Gold is hovering near its highest price level in four months due to safe haven demand on concerns about global economic growth and the unresolved euro debt crisis.

The possibility of Ben Bernanke and Mario Draghi announcing further money printing and monetary easing is also supporting gold.  The US Fed chairman speaks this Friday and may or may not choose Friday to announce QE3.  However with a Fed meeting set for September, it is unclear when further stimulus measures will be announced.

XAU/EUR Exchange Rate – (Bloomberg)

Should Bernanke fail to announce further QE Friday then we would expect sharp falls in stock markets and gold could again suffer some short term weakness.

Zero level interest rates and a QE3 announcement will be extremely bullish for the yellow metal.

Monday’s figures showing US consumer confidence fell in August to its lowest in 9 months was positive for gold as it shows that the US economy remains in bad shape and is deteriorating increasing the likelihood of the current policy response of choice – money printing.

XAU/EUR Exchange Rate – (Bloomberg)

The technical picture for Euro gold looks near perfect now.

Gold has been trending higher since May. The long term charts show a series of higher lows and higher highs and even in the correction of recent months there have been a series of higher lows and gold gradually consolidated between €1,200 and €1,400/oz.

Gold is now comfortably above the 50, 100 and 200 day moving averages. 

In the last four years, there have been 3 periods of correction and consolidation which have lasted 12 to 13 months (see boxes in first chart) and we appear to be coming to the end of another such period. 

Break outs from such consolidations often lead to sharp moves higher and thus new record highs above €1,359/oz and possibly over €1,600/oz should be seen before the end of 2012.

The fundamental back drop of the unresolved Eurozone debt crisis , deep divisions in the ECB and a high degree of uncertainty regarding the euros long term future strongly suggest that the euro will continue to fall against gold in the coming months. 

Further confirmation of robust demand for gold is seen in figures showing that exchange-traded products backed by the gold expanded to a record. Smart money from Paulson to Soros to PIMCO continues to diversify into gold. 

Gold ETFs holdings have now surpassed Italy to become the world’s third-largest gold holdings when compared with national gold reserves.

Investors now own 78.99 million ounces in ETPs, exceeding Italy’s 78.83 million ounces, according to data compiled by Bloomberg and the International Monetary Fund. Only the USA, and Germany hold more. ETP assets rose 4.3 percent this year

The gold ETF holdings and national gold reserves remain tiny when compared to the massive debts of most western nations and the massive foreign exchange reserves of many creditor nations.

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Cross Currency Table – (Bloomberg)

(Bloomberg) -- Capital Economics Raises Year-End Platinum Forecast to $1,400
Capital Economics Ltd. raised its forecast for platinum prices for the end of this year to $1,400 an ounce, from a previous estimate of $1,350.

Prices will be at $1,500 by the end of 2013, up from $1,400 previously forecast, the company said in a report e-mailed today.

(Bloomberg) -- Platinum is set to retreat 2.4 percent in the short term before resuming an upward trend in the medium term, according to a technical analysis by JSC Corp.

The precious metal surged to the highest level in more than three months amid labor unrest in South Africa, the world’s largest producer. Platinum dropped to its 200-day moving average after climbing above the line on Aug. 22, signaling the metal is in a short-term correction phase, said Takaki Shigemoto, an analyst at the Tokyo-based research company.

“The metal is poised to fall further to around $1,483, or the middle between its 50-day and 150-day moving averages,” he said today, without giving a timeframe. “That would give investors a good chance to buy as the market is still in a medium-term upward trend.”

Platinum jumped above the cloud on the Ichimoku chart on Aug. 20, indicating the metal entered an upward trend and may return to this year’s peak of $1,737.25 reached in February, he said. The chart analyzes midpoints of historic highs and lows, or so-called resistance and support levels, with a breakout from above or below the cloud pointing to a trend. The metal closed at $1,518.75 yesterday.

About one-fifth of global production capacity was idled this month after police shot dead 34 protesters at Lonmin Plc’s Marikana operation on Aug. 16 and 10 people died in fighting during the strike by rock drillers in the worst mine violence in South Africa since apartheid ended. Before the unrest, platinum had tumbled 21 percent from a year earlier as demand slowed for use in pollution-control devices in vehicles and jewelry.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

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