EurAnalysis

Hi reckon long time indeed! I'm good very busy at the moment I've to be very early if I'm to get a good opportunity to trade as I'm studying for the end of year exams which go towards my final degree grade so they're quite meaningful!

How are things going for you? Any closer to full time trading?

I just figured out what happened last week on markets.
EURUSD turned bullish and JPY started weakening rapidly.

This is where bears went:
http://www.bbc.co.uk/news/world-asia-17784465

Hi everyone

Today so tired

Report today...

Cable

Break @ Price 1.6143
still got Potential Upward again to Price 1.6170 or Higher 1.6205 (for MAX)


Euro

Break @ Price 1.3224
still got Potential Upward again to Price 1.3233 or Highger 1.3259 (for MAX)

hi buddy i am just passing through,i am currently on a friends laptop on a boat on the sea lol. The markets are acting beautifully and i'm catching pips like fish in a net.I do have to say so but a lot of negative talk is thrown around this room and biased talk. We are traders and need to keep level unbiased head especiaaly the likes of me who do it full time for a living. So take care my frien.

Will the doo-dad that was worth 10 euro be worth 10$ NP?

Economics 101 tells us that price is formed by demand and supply. If demand and supply is stable and spain is still part of the trade union the doo-dad will be worth the same price in euros that was worth before...just converted in pesos. If the doo-dad will be worth only 10$ NP (instead of 10euro) but the same doo-dad will be worth in the neighbor country 10 euro of course the other country's citizens will prefer the spanish item...and the demand for it would rise so the price will rise also.

If there is a free market it's impossible to keep the prices under or over their natural level.

Inflation would help spain's predicament because it will practically fool/steal the creditors(if they will pay back in NP) or their citizens(if they pay back in euros but force citizens to accept NP at a 1-1 exchange rate) by not giving them back the same value that they lended.

Either way somebody's going to get burned...and in the long run Spain will suffer dearly for leaving the Union. Yields will soar and that might translate into a default.

This is why I don't believe Spain will leave the eurozone unless it gets kicked out. (so far european law does not permit or include procedures for such a thing)

Holllyyy crappp

post out
post out
post outtt

give me your facebook ID Sir Billyt

http://www.borowitzreport.com/

Shortchanging by Secret Service Draws Strong Rebuke



http://www.borowitzreport.com/wp-con...ds/hookers.jpg NEW YORK (The Borowitz Report) – Days after Secret Service agents shortchanged a group of prostitutes in Colombia, the international trade group representing hookers downgraded the United States’ credit rating from AAA to B.

The strong rebuke from the International Alliance of Professional Escorts came after a Secret Service agent reportedly paid one of its members $30 for an $800 service, or only 4% of the stated price.

The statement from the International Alliance of Professional Escorts said that in downgrading the United States’ credit rating it was sending a clear message that its “members should be aware that doing business with the government of the United States carries with it a significant risk.”

“We are urging our members to avoid conducting transactions with the United States and to focus on more reliable customers, like the International Monetary Fund,” the statement added.

Just hours after the announcement from the escorts’ group, the U.S. Congress passed the following resolution blasting the Secret Service for its actions: “We strongly denounce the Secret Service for consorting with prostitutes, which has traditionally been Congress’s role.”

But it was not all bad news this week for the Secret Service, which today reported a 5000% jump in enlistment.

The agency said that enlistment offices across the country have been packed with prospective agents, including House Speaker Newt Gingrich, who abruptly dropped out of the Presidential race to join.

FX Weekly Outlook & Strategy, 23-27 Apr


17:05 (GMT) 20 Apr [Forex Strategy]




http://ca.mg6.mail.yahoo.com/ya/down...d=YahooMailNeo

FX MMKT Weekly Outlook & Strategy, 23rd to 27th April
* Election results and IMF news to worry about first thing......
* .... then the FOMC decision is due on Wednesday
* UK Q1 GDP is on a knife edge - we expect a positive, if only just
The Last Week:
* We all play at bond traders as Spanish 10 year yields toy with 6% - though the auctions are well enough re ceived
* FX markets jump to any hint of interest rate moves
* GBP the star as MPC doves take fright, retail sales soar


http://ca.mg6.mail.yahoo.com/ya/down...d=YahooMailNeo

The slowdown in March activity no doubt led to more dour moods among builders. This was seen in the April survey from the National Association of Home Builders, whose monthly index of sentiment shed three points during the month, breaking an upward string which started last October. Present sales, traffic in showroom offices and expectations of sales during the next six months all faltered somewhat.

Retail sales rose by 0.8% during March. While a pretty solid figure, it nonetheless was slower than that seen in February, itself downgraded a little to a 1% rate for the month. It occurs to us that the bump in spending during the first three months of the year might easily be traced to the pretty strong pace of hiring in December, January and February, as folks back on payrolls are arguably more likely to spend than those in un- or underemployed situations are. To the extent that this is the case, the 120,000 new hires in March may engender a slower pace of retail sales gains over the next month or two.

Early indications are that hiring doesn't appear likely to rise much in April, either. Initial claims for unemployment benefits have bumped measurably higher in the last few weeks, holding some 25,000 applications higher than levels seen as recently as late March. During the week ending April 14, some 386,000 new claims were filed, and almost all subsequent revisions of late have resulted in higher figures, not lower. Should this pattern persist, we might see a marked slowing in hiring for April, or at least one no better than that seen in March.

A tempering in growth was also seen in reports covering manufacturing activity in both the New York and Philadelphia Federal Reserve districts. The Empire State Manufacturing index sported a considerable fall in April, where it landed at a value of 6.6, down from a strong 20.2 level in March. There was a less pronounced decline over in the Philly district, and their local indicator slipped from 12.5 in March to a reading of 8.5 in April. Expansion is still happening in both these areas, but at a considerably cooler pace than recent levels.

The overall measures of Industrial Production put in a second consecutive month with no change at all, posting a 0.0% gain/loss in March.

Manufacturing output eased by 0.2% while mining concerns showed a 0.2% gain. Utility output bounced 1.5% higher after a couple of very slow months, but that rise is probably related more to more air conditioning demand as warm weather persists in much of the country. The percentage of production floors in active use eased by a tenth of a percent during the month and stands at 78.6%. We routinely held above the 80% level in the years prior to the recession and remain far from utilizing any kind of full capacity.

Overall inventories of goods rose by 0.6% back in February. Sales of items were sufficient to keep the ratio of goods on hand to sales at a constant and comfortable level, so orders should continue to make their way though the supply chains and keep the economy moving forward. If the latest report on Leading Economic Indicators can be trusted, it will do so on a slightly lesser pace. The LEI rose by 0.3% in March, less than half the outsized gain seen in February, but it's too soon to tell if the change presages and significant slowdown to come. To the extent that the LEI tells the future, we should have some forward momentum for months yet, but the indicator may better reflect the period in which its component data were gathered.

Consumer moods play a role in the fate of the economy, too. The weekly Bloomberg Consumer Comfort Index moved back to four-year highs during the week ending April 15, stopping its climb at a reading of minus 31.4 for the week. Of late, gasoline prices have largely stopped rising and may have even started to ease a little, and that may be serving to help moods improve to some degree. Still, with the "summer driving season" not yet upon us, it seems reasonable to expect that prices may yet move higher, and this might damp moods anew should it occur.

For wanna-be mortgage borrowers, disappointing economic news is music to their ears. Troubles in overseas markets have resurfaced and the economy here seems to be sputtering to a greater degree. A strong surge in stocks during the first quarter turned into a selling event to lock in profits, and at least some of that money which optimistically sought higher returns in riskier investments has again returned to the safety of bonds and Treasuries, pulling interest rates back down.

Will the tide of disappointing yet still moderate economic news continue next week? It seems to us that it will. Since the builders have already weighed in, a softer report on new home sales seems a given. We have already mentioned that we think GDP will come in with a downturn relative to the fourth quarter of 2011. There are a couple of other indicators including Consumer Confidence and Sentiment gauges which may nudge downward. If the Fed leaves any impression that it is more likely to move to support the economy (unlikely), we could see interest rates move upward. At the moment, though, and based upon this week's market activity, we don't seen much movement happening in mortgage rates for next week.


HSH surveys mortgage lenders across the country each week, and generates reports for consumers as well as competitive analysis services and statistics from its databases with over 30 years of current and historical data. Daily statistics and samples of our services and information are available at no cost at http://www.hsh.com/.

So that's why usd droped... Should of predicted this...1.45 soon?

http://www.multiplier-effect.org/?p=4261

21st Annual Hyman P. Minsky Conference: Debt, Deficits, and Financial Instability

L. Randall Wray | April 16, 2012
The annual Minsky conference, co-sponsored by the Levy Institute and the Ford Foundation, was held this past week in NYC. The audio transcripts of all the presentations (including one by yours truly) are online here. (I will also add my powerpoint below so you can look at it while listening to the audio.)

My presentation quickly summarized results of a project I am directing that examines democratic governance and accountability of the Federal Reserve, focusing on its response to the global financial crisis. You can read our first report here.

I won’t go into that today. I just wanted to very quickly summarize two quite interesting statements made by others over the course of the conference.

First, Joe Stiglitz had a great analogy about derivatives. Recall that part of the reason for the creation and explosion of derivatives was to spread risk. For example, mortgage-backed securities were supposed to make the global financial system safer by spreading US real estate risks all over the world. He then compared that to, say, a deadly flu virus. Would you want to spread the virus all over the world, or quarantine it? Remember Warren Buffet’s statement that all these new financial products are “weapons of mass destruction”–like the 1914 flu virus. And, indeed, just as Stiglitz said, spreading those deadly weapons all over the world ensured that when problems hit, the whole world financial system was infected.

The other observation was by Frank Partnoy, and also addressed the innovations in the financial sector. He said that these innovations mostly exploit information asymmetries in order to:
a) dupe customers (think Goldman Sachs and John Paulson constructing synthetic CDOs sure to blow up, and betting against Goldman’s customers who bought them); and
b) engage in regulatory arbitrage (evade rules, laws, supervisors, etc; ie, move trash into SIVs to evade capital requirements).

So here’s the question: why on earth do we let protected financial institutions—that have Uncle Sam standing behind them to clean up the mess they make—engage in such activities. As was pointed out by someone (I’ve forgotten who—but you can listen to the transcripts), financial innovations are very different from innovations in the “real” sector: they almost never have social benefits that exceed the social costs.

Anyway, go to the links above, and enjoy. It was a very good conference. The slides from my talk are below.

Publications


Research Project Report | April 2012
Improving Governance of the Government Safety Net in Financial Crisis



This monograph is part of the Levy Institute’s Research and Policy Dialogue Project on Improving Governance of the Government Safety Net in Financial Crisis, a two-year project funded by the Ford Foundation.

In the current financial crisis, the United States has relied on two primary methods of extending the government safety net: a stimulus package approved and budgeted by Congress, and a massive and unprecedented response by the Federal Reserve in the fulfillment of its lender-of-last-resort function. This monograph examines the benefits and drawbacks of each method, focusing on questions of accountability, democratic governance and transparency, and mission consistency. The aim is to explore the possibility of reform that would place more responsibility for provision of a safety net on Congress, with a smaller role to be played by the Fed, not only enhancing accountability but also allowing the Fed to focus more closely on its proper mission.

Download:
Research Project Report, April 9, 2012
Associated Program:
Monetary Policy and Financial Structure

Author(s):
L. Randall Wray










http://www.levyinstitute.org/multipl.../04/Slide8.jpg

http://www.levyinstitute.org/multipl.../04/Slide9.jpg

http://www.usagold.com/publications/...ter042012.html

Surging central bank gold demand adds

new dimension to bull market

The longer-term trends in gold's supply-demand fundamentals point to a potentially explosive market situation in the years ahead. In short, the supply trend is static to shrinking while global demand trends, particularly from investors and central banks, appear to be in a period of rapid expansion. What's more the political, financial and economic dynamics driving these trends are not likely to undergo any significant reversal anytime soon for reasons explored below. Up until now, gold's secular bull market has been driven by a combination of private and institutional investor demand. Though those two components in the demand picture remain well-defined, it is the arrival of deep-pocket central banks in emerging countries like China, Russia, Saudi Arabia, India, Mexico, Brazil, as well as players yet to be named, that have added a whole new dimension to gold's secular bull market.
Investor demand tends to ebb and flow based on changing views about the economy, financial markets, and the price itself, i.e. whether gold is perceived to be over-bought or over-sold. As a result, investor demand is generally viewed as an inconsistent aspect of the supply-demand tables. Central bank demand is more rooted in longer-term policies having to do with the value and safety of national reserves, and these policies tend to play out over the course of years or even decades. As a result, changes in the way gold is viewed by central banks are likely to have a significant, even profound, long-term effect on the market -- in fact, the consistent nature of central bank demand can be viewed as putting a floor under the price. (In late 2011, for example, when the price dropped from all-time highs in the $1900 per ounce range, the Chinese central bank reportedly purchased a significant amount of physical metal.) That makes 2011 -- when central banks for the first time in decades became net buyers of gold bullion -- an important watershed year for the gold market.

http://www.usagold.com/publications/...urchsales.jpeg

China remains the centerpeice in the contemporary gold market. As both the world's leading producer and consumer of gold, it plays an important role on both sides of the supply-demand equation. It should go without saying that gold owners would be well-served to understand how China views gold. Obviously a favorable "official" attitude toward gold from its top consumer and producer would play a hugely supportive role in the years to come; and a dismissive, or negative attitude would act to its detriment. China's central bank and federal government see gold as a hedge against its holdings of U.S. dollars and other currencies subject to debasement. Any number of individuals, ranging from members of its academia to government policy makers and important functionaries in the central bank itself, have warned against the instability of currency reserves and the importance of establishing a reliable hedge. In fact, the Peoples Bank of China advocates a 4000 tonne gold reserve. It now holds about 1200 tonnes. Such thinking affects the supply side in that China is likely to continue "domesticating" its gold production as part of its national reserves. On the demand side, it makes China a ready buyer of any sizable tranches of gold that become available on the market -- no matter the source. In fact, recent reports have surfaced that China has launched a program of buying gold directly from mining companies around the world as a means to building its reserves. The London Telegraph's Ambrose Evans-Pritchard reports one source, predicting that China will acquire "several thousand tonnes of gold over the next five years to match the US stash of 8,000 and the Euro Zone's 11,000."

The fact that this pro-gold attitude has become ingrained in the "monetary thinking" of China's economic policy makers will figure largely in supply-demand tables in the years to come and will act as a catalyst for similar thinking in other similarly positioned nation-states. Russia, for example, the fifth-leading producing country follows a similar policy; and recently South Africa, the fourth-largest gold producing country, took steps to move away from the dollar and toward China's renminbi, in international currency transactions. How long before it sees fit to follow a gold policy similar to the one in place in China? The three countries together account for 28% of the world's annual gold production.

Central banks becoming net buyers of gold top story for 2011

WSJ: IMF Creates 'Global Firewall' Against Financial Crisis

Posted on 20 April 2012 20:22 | By Sudeep Reddy And Brian Blackstone | Of THE WALL STREET JOURNAL

WASHINGTON (Dow Jones)--The world's top finance officials agreed Friday to boost their shared financial firepower in an effort to protect the global economy, as European turmoil threatens the recovery for the third straight year.

The International Monetary Fund, the world's emergency lender, announced pledges by many of its member nations to nearly double its lending capacity to more than $700 billion, creating what officials dubbed a "global firewall" aimed at containing the euro-zone debt crisis.
(This story and related background material will be available on The Wall Street Journal website, WSJ.com.)

The new funds--though not earmarked for any region--could be used for more bailouts of troubled euro-zone economies, setting the stage for more contentious battles in the coming months if large economies such as Spain and Italy need financial rescues.

IMF and government officials applauded the pledges as a sign of the international community's joint commitment to address the financial turmoil stemming from Europe's debt woes, but also agreed the added funds won't end the crisis. European Central Bank President Mario Draghi said the new money would be useless unless governments took steps to rein in their budgets and restructure their economies.

The deal came together as finance ministers and central bankers from the Group of 20 leading advanced and developing economies gathered in Washington. Some officials compared the moment to a gathering during the global economic crisis in early 2009. Nations agreed then to increase the fund's resources, which along with policy moves by the U.S. and other nations helped calm that crisis by showing that governments could band together to fight global threats.

The new agreement marks a victory for IMF Managing Director Christine Lagarde. The former French finance minister, who took her post last July, laid the groundwork from her first months in office for a substantial fundraising effort to elevate the fund's power as European risks mounted.
She overcame resistance from a number of countries--including the U.S., the IMF's largest shareholder, which won't be contributing additional resources--to draw new funds from advanced and emerging economies.

The U.S. welcomed the new funding pledges, but the IMF already had adequate resources, a U.S. official said. The official told reporters after the G-20 meeting that market reaction to the euro crisis will depend on how well Europe proceeds with a broader response, such as implementing economic reforms, ensuring banks have enough capital and providing support from Europe's own rescue fund.

"This has been a huge effort, but it has been an extraordinary group dynamic," Ms. Lagarde said Friday, applauding the "collective drive" to fight the crisis.

The agreement ends an eight-month debate, which exposed rifts among some of the world's leading economies.

The U.S., China, Brazil and other economies insisted since last fall that Europe would need to vastly increase its own rescue fund before any new money would go into the IMF. Europe late last month expanded its rescue fund to about EUR700 billion ($925 billion), but it remains below what officials sought. The resistance from some countries led Ms. Lagarde to scale back her fundraising target last week to about $400 billion from her earlier goal of $600 billion.

The U.S. official said Friday that the prospect of an IMF increase at this meeting acted as an incentive for Europe's move last month.
Some opponents of the IMF fundraising effort argued it would reduce pressure on the euro zone to take action on its own.

"The notion that the fund's resources are on tap for Europe could become a self-fulfilling prophecy," said Cornell University economist Eswar Prasad, a former IMF official. The additional firepower, for which European nations lobbied heavily, "could give a sense of false comfort to European policy makers that they have done enough to fend off market pressures."
The euro zone already accounts for a disproportionate share of IMF loans after the rescues of Greece, Portugal and Ireland over the past two years. That's generating a backlash among non-European members of the IMF, who question whether the fund is overextended to one region of the world.

In a statement, the G-20 members said the new IMF money would be "available for the whole membership." They said any new loans would be subject to the fund's regular borrowing terms, but officials would not rule out any further loans to the euro zone.

Spain in recent weeks has seen renewed volatility in its borrowing costs, pushing the yield on 10-year Spanish government bonds near the psychologically critical 6% level and raising fears that the country might trigger a fresh round of euro-zone turmoil. Italy's borrowing costs have also edged higher, although less dramatically than Spain's. New governments in both countries are trying to push economic policy overhauls to win over markets and end their crises.

European nations, which became the first to commit to the IMF fundraising effort in December, have pressed other countries to help shore up the fund's resources. Europe's beefed-up crisis fund would likely be insufficient if Italy and Spain--the euro zone's third- and fourth-biggest economies, respectively--needed rescue packages. Many analysts doubt even the two combined firewalls--in Europe and the IMF--would be enough.

"Europeans have achieved our main goal," said European Commission economics chief Olli Rehn, referring to the larger IMF war chest. "This is good news for Europe" and the global economy, he said.

Mr. Draghi, the ECB chief, welcomed the accord, saying Europe's "four-pillar strategy" of structural economic reform, fiscal belt-tightening, expanded firewalls and low inflation "is falling into place."
The ECB has already taken significant steps to stem the debt crisis and spur economic growth. Since May 2010 the ECB has purchased roughly EUR220 billion in sovereign bonds of Greece, Spain, Portugal and others in Europe's struggling periphery.

Last fall, the ECB said it would extend three-year loans to banks to help them meet their funding needs. The ECB eventually loaned banks a total of over EUR1 trillion in these loans.

The ECB's policy rate was reduced last November and December, bringing it back to a record-low 1%.

The IMF said this week that the ECB may need to do even more, including additional rate cuts and more cheap loans to banks.

Mr. Draghi was cool to the IMF's recommendations. "It's a free world, so we take note" of the IMF's views, Mr. Draghi. However, "none of the advice that the IMF is offering has been discussed by the governing council, in recent time at least," he said.

Mr. Draghi is hamstrung in part by the ECB's mandate to keep annual inflation at 2%. It is far above that target now, at 2.7%. Additional stimulus measures could also spark furor among the ECB's conservative wing, led by Germany, that worries about the inflationary risk of abundant bank loans and easier monetary policy.

But many analysts think more ECB action is needed to break a vicious cycle of growth-draining fiscal budget cuts and economic recessions already gripping Southern Europe. Unemployment across the 17-member euro bloc is 10.8% and likely to climb higher. It is over 20% in Spain and Greece, where one-in-two youths are unemployed. Many economists expect the euro-zone economy to shrink this year.

"We doubt that a combination of austerity and large bail-outs will solve the region's problems, wherever the bail-out money comes from," economists at consulting firm Capital Economics said in a research note.
--Tom Barkley contributed to this article.
(END) Dow Jones Newswires
April 20, 2012 20:22 ET (00:22 GMT)

I get this sense that things are getting out of control. I will welcome other opinions on the subject.

Good Morning

The dollar index hung in around the 79.60 mark until about 10:00 a.m. Hong Kong time on their Friday morning...and then rolled over. Most of the decline was in by 10:30 a.m. Eastern time in New York...and the index basically traded sideways from there. The dollar index closed down about 34 basis points at 79.14.

http://www.caseyresearch.com/sites/d...32-470x307.gif

http://golden-markets.com/weekly-mar...e-apr-20-2012/

Major Currencies
A number of fiat currencies had a really good week, with the Real and Rupee gaining over 3%. At the bottom, the Rand, the Krona, the Pound and silver was pretty flat.
Comparing the Q1 to the YTD columns, we see that there have been few major changes during Q2 thus far.
Silver is still the best performer 2012, at +8.2%, with the Japanese Yen as the only fiat currency displaying black numbers, and while the Russian Rouble is down 12%.


The Golden Markets Weekly Update is a free newsletter that tracks the World’s major stock markets, currencies and commodities in terms of a single currency, gold.

http://www.financialsense.com/contri...for-the-market

There will be some drama, and few splashy headlines out of the G-20 meeting in D.C. this weekend. Europe is cracking up (again), and the IMF and big guns of the G-20 will spout about “expanded firewalls” and “global co-ordination” in the final communique Sunday evening. If we don’t get a big dose of “happy talk” then the markets will crap out.

A big agenda item for the weekend is the $400b capital raise for the IMF. There will be plenty of corridor conversations and side deals regarding which country puts up what, and what deals it gets for the money.
There are two sideshows of interest in the IMF's new money raise. The first is the USA; the second is Switzerland.

The USA is not going to be a player in the IMF deal. That blows my mind. The USA is the biggest stakeholder in the IMF, but when push comes to shove, and there is a Rights Offering of the common shares, the USA says, “No thank you”.

The USA "no-show" at this critical juncture is due to election year politics. Tim Geithner knows that he could not sell Congress (much less the American people) on a plan where US funds are used to bailout the EU, while there is so much pain at home.

http://imagesize.financialsense.com/...-euro-fund.jpg

The “We’ll take a pass on this one” attitude by the US speaks volumes about the credibility of the happy talk we will hear on Sunday. Without the US involvement in backstopping the Euro Zone, there is no backstop. This reality will undoubtedly be a topic of those corridor chats.

What does that mean? The following countries have made commitments to the IMF:

http://imagesize.financialsense.com/...-countries.jpg

Switzerland has a GDP of $0.6T. Based on the above information, it might be expected to commit about 2% of GDP, or approximately $12B. I suspect the amount will be much higher. The reason is that Switzerland has a mountain of reserves that it has accumulated on the backs of the EU countries. The Swiss have built up these reserves through years of currency intervention. Now it will pay the price that comes with an undervalued currency.

All of the big hitters from Switzerland will be in attendance this weekend. The President, Eveline Widmer-Schlumpf, the Minister of Economics Johann Schneider-Ammann, and the new boss at the Swiss National Bank (SNB), Thomas Jordan, will all be at the party. The big shots should be there, after all, they are about to give a large chunk of the country’s money away.

Kno's Comments: There will also be plenty of hookers there and hopefully they will be better paid than last week in Columbia.

I thought it was funny... I think most of the hookers are clean shaven.

http://www.kitco.com/reports/KitcoNews20120420DeC.html

(Kitco News) - The direction of the U.S. dollar versus the euro and a meeting of the Federal Reserve’s monetary-policy committee will influence the direction for the precious metals markets next week.

Weekend events, such as the outcome of the International Monetary Fund meeting and the first round of French presidential elections, may also impact precious-metals prices.

Prices were mixed on Friday and mixed on the week. The most-active June gold contract on the Comex division of the New York Mercantile Exchange rose Friday, but settled at $1,642.80 an ounce, down 1.05% on the week. May silver fell Friday, but settled at $31.651 an ounce, up 0.83% on the week.

In the Kitco News Gold Survey, out of 33 participants, 25 responded this week. Of those 25 participants, 11 see prices up, while six see prices down, and eight are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

The U.S. dollar’s movement could be what determines where gold trades next week. Some cited Friday’s weakness in the dollar and strength in the euro as potentially supportive for gold. Normally gold and the dollar trade inversely because gold is denominated in dollars. Just how much strength the euro will have next week could depend on the outcome of the French presidential election, with current President Nicholas Sarkozy and socialist candidate Francois Hollande expected to advance to the second round. The second vote will occur on May 6.

Brown Brothers Harriman said that Hollande has suggested European Central Bank should cut rates to help the eurozone while Sarkozy has said that the ECB should play a “pro-growth” role for Europe. “No matter who wins the election in France, the fraying of Franco-German relations is already being seen and is likely to get worse as the French economy outlook deteriorates,” BBH said.

Barclays Capital said they believe that Hollande will win the May 6 second round, but said they worries about Hollande are overblown. “Although Hollande's policy proposals have captured market attention, we think the election is likely not a game changer,” they said.

The IMF is meeting Friday and this weekend to discuss, among other topics, the continued sovereign-debt problems in Europe. The IMF expected to achieve the $400 billion dollar boost it seeks to help Europe and sources said more clarity could come on the expansion in IMF funding, giving markets a stronger sense on what’s available to support the global economy.

Another influence on the euro may be the results of the eurozone purchasing managers’ index, a manufacturing survey. Higher-than-expected data would be euro-supportive, while lower-than-expected data would pressure the euro.

Several market watchers said if the euro weakens, the dollar will likely rally and pressure gold, while if the euro stabilizes and rises, gold may also follow suit since the dollar would fall. But not everyone thinks the dollar is hampering gold. Some suggested that gold is tripping on its own weight because of its range-bound trade lately.

Frank Lesh, futures analyst at FuturePath Trading, said perhaps gold is weakening despite currency movements.

“Gold is losing its luster and trade (Friday) is an example of the situation. When was the last time we have seen the dollar index down 45 points and gold struggle…? This year traders are not rewarded being long. Traders no longer say don’t be short as there are opportunities on both sides of this market now. The charts look bearish with a succession of lower highs and lows. I expect gold to trade lower next week,” he said.

Market participants will also watch the outcome of the next Federal Open Market Committee meeting on Wednesday. Federal Reserve Chairman Ben Bernanke will speak after the results are released.

There is no change expected in the policy as rates are likely to stay at historic lows. Analysts at Nomura said “we think the statement will reflect a modest fine-tuning of the committee’s assessment of current and prospective economic conditions. How the committee chooses to weigh its assessment of incoming data could affect market perceptions of future policy actions.”

They added that they don’t believe the FOMC will want to “convey a new message. But the forecasting process, and Mr. Bernanke's comments, may give us some new insights into how the committee’s thinking about the future course of monetary policy is evolving.”

If the market feels another round of stimulus may be in the offing, that could support gold prices, traders said.

Also, next week brings the Indian festival Akshaya Trithiya and market watchers are closely gauging demand considering physical demand there has been light lately because of a weak Indian rupee and a now-ended jewelers strike to protest higher taxes. Several analysts have said buying interest in gold at recent dips in prices has not been enough to encourage buying, so it may take a trip lower to do so.

“Taken in the context of next week’s significant Akshaya Tritiya festival, this (lack of demand) is somewhat worrying. By this time last year, volumes were consistently well above average. Robust volumes were sustained for more than a week following the festival, only falling off materially two weeks later…. This year, with time running out before Tuesday's festival, buying patterns observed so far this year suggest that the likelihood of a surge in physical demand is quite limited unless a deeper price pull-back occurs. Current prices are not enticing physical buyers,” said Edel Tully, UBS strategist.

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Market Nuggets: FOREX.com: FOMC Likely To Leave Monetary Policy On Hold At Upcoming Meeting



Friday April 20, 2012 01:59 PM

The Federal Open Market Committee will likely leave monetary policy on hold when it meets Tuesday and Wednesday, says Eric Viloria, senior currency analyst with FOREX.com. “We expect that the Fed will keep all options on the table as there is still a large amount of uncertainty with regards to the health of the U.S. labor market,” he says. “The four-week moving average in weekly initial jobless claims has ticked higher over the past couple readings and the March employment report was disappointing. One month’s worth of disappointing data is not enough to prompt action by the Fed and therefore we expect the bank to maintain its current stance.”

Much focus will be on Chairman Ben Bernanke’s press conference and the bank’s updated interest-rate projections, Viloria adds. “We have seen a variety of viewpoints from various Fed officials and the projections will help to clarify the bank’s view and manage expectations,” Viloria says. “A shift in the timing of the next probable rate increase would impact markets broadly and any sign of tightening sooner than previously expected could have a positive impact on U.S. yields and the dollar with the possible for a knee-jerk reaction lower in risk sentiment, while prolonged low rates would have the opposite effect.”

By Allen Sykora of Kitco News; [email protected]