The day ahead 31 May 2016

Good morning,

Tokyo led Asian stocks higher on Monday, as the Nikkei heads towards a close above 17,000 points for the first time in a month, after the yen plummeted against the strengthening dollar. Data released earlier in the session showed Japanese industrial output unexpectedly rose 0.3% in April, suggesting production is holding up despite weak exports and the impact from a series of earthquakes that struck southern Japan during that month. Shares in Shanghai surged +2.43% , Hong Kong +1.25%, while the ASX slipped  -0.19%. Underpinning Asian sentiment, European shares hit one-month highs on Monday amid otherwise light trade with markets in London and New York closed for public holidays.

In FX space the Aussie gained against its peers as building approvals data for April came in much better than expected (+3% against -3% exp). The positive sentiment also saw the Kiwi rally, whilst sterling soared above the 1.47 only to quickly retreat back towards the 1.4650 handle against the US dollar. The Euro is also under pressure as we head towards the European open.

Gold rose for the first time in 10 days -- breaking its longest losing streak in more than a year and currently sitting at $1212. Although strongly underpinned amid the extended broad based US Dollar correction, it looks to build a recovery towards the 100 dma located around $1217.50. Oil pushed back towards the psychologically key $50 a barrel mark as moves were limited ahead of Thursday's meeting of the Organization of the Petroleum Exporting Countries. WTI sits at %49.58 and Brent at $49.73.

So to the day ahead and it looks to be a busy day as we enter the last sessions of the month. First up we have  German Retail sales (0700 BST) and Unemployment Report (0855 BST). Last week’s sentiment data suggests that Germany’s moderate growth trend will roll on, based on survey figures for consumers, the financial community and the business sector. There’s still concern about the near-term outlook, according to business polling, but overall, the mood points to more of the same: Economic expansion that’s less than stellar but strong enough to support the Eurozone's modest recovery. Forecasters are looking for a positive retail sales number of 1% whilst the jobless rate is set to remain unchanged at a low 6.2%. Close attention will be paid to the monthly update on changes in the number of newly unemployed workers for deeper context about the labour market trend.

Canadian GDP (1330 BST) The economy declined 0.1% in March, its first decline since November 2015 and the estimate for April is more of the same. According to Bank of Montreal, first quarter GDP is expected to rise nearly 3% annualized, thanks to solid growth at the turn of the year and a nice boost from net exports. Unfortunately, it said, the economy lost momentum as the quarter progressed, with March GDP expected to come in flat after a small contraction in the prior month adding Canada is going to get some sizeable volatility in the months ahead due to the Alberta wildfires and resulting drop in oil production.

US Consumer Confidence Indicator (1500 BST) Last week’s revised data for the University of Michigan’s Consumer Sentiment Index for May points to an improvement in the mood at the Q2 midpoint. The benchmark was revised down a bit from the preliminary reading for this month, but the index still posted a solid bounce higher against April – and relative to recent history as well. The CSI’s strength bodes well for today’s release of the Conference Board’s Consumer Confidence Indicator (CCI), a competing measure. The two indices track one another, although there can be substantial differences in the short term. Economists think that today’s first look at the May data for CCI will post a solid rise to 96.0 for May against 94.2 in the previous month. A firmer reading for the Conference Board’s index isn’t surprising in the wake of CSI’s latest jump. If the upbeat forecast holds, the case will strengthen for arguing that consumer optimism is rising in the second quarter.

Trade Smarter

Anish 

Gold & Platinum Shining In 2016!

Ladies and Gentlemen,

Gold has rallied almost 17% this year and most analysts are looking at the Metals markets heading higher, spear headed by the Yellow Metal.

So what has been the key driver of Gold this year? Well, Monetary Policy in US. If we look back at last year one of the reason Gold struggle to rally is because it was cautious about the rate hike.

This year, the drivers have changed. Looking at the Financial Market & Global Economy as a whole. After last months FED meeting we saw Gold getting a lift, upon the cautious dovish notes.  We also saw that China Gold imports were lower recently and heavy restocking, especially ahead of the New Year (Jan - heading into February).






 












So what is the cap then on the upside? Well, as Gold prices rally quickly the downside range can also be greater. Hence why if we saw a huge spike up to $1300 it could be bad for the market. However, if we see prices correcting at these levels (as well as the physical market adjusting) and the market coming into the right support - this could provide for a much more sustained move higher.

Another interesting market... Platinum. 

Platinum flirting with 1,000 per ounce, after a 5 year pressured market and that has not been enough to lift prices at all. The underlying stocks have also been quite high with supply growing also. However, 2016 looks like the year we will see XPTUSD start to base around the 1,000 per ounce mark and prices should be lifted from here.

There is also a strong fundamental reasoning for this sustained move higher. Firstly, South Africa (accounting for 80% of the World's Platinum) and their wage negotiations, which will be very significant. From this, we should see more producer discipline and cut backs in supply growth, this should lift in investor sentiment.   Most of the Rand volatility should also support this wage case.

Secondly, the Jewelry market - which was incredibly weak last year.. although the price elasticity has come back into play this year offering a greater floor for prices.

As always. Trade Smarter

Anish8FX@Atom8.com

CALLS FROM THE TRADING FLOOR - BUY GOLD!

Ladies & Gentlemen

After a four-year slide, the price of Gold has nowhere to go but higher and many investors are starting to agree. The case for the "safe-haven" was further assured today, as China's manufacturing data showed a contraction.

For the majority of the Commodity markets, January was another bad month in a long bear-market cycle - apart from Gold. Gold rallied 5% in Jan, the best monthly gain in a year.  

Turmoil in Chinese markets (with the view of a potential Global Sell-Off), Oil price uncertainties and a slowing US growth has tickled Investors demand for the traditional safe-haven asset. Again, their remains a high chance the FED will hold off on further interest rate rises this year adds to the attraction for the yellow metal. 

There is really no sign of a re-surge in inflation and this has also been a large factor to Golds rise and this relationship goes back to the 1980's. However, what is interesting is that through the last 12 month Gold slide, we have had China, Russia and India continuing to purchase Gold (about 55% more in 2015) - but then why did not this affect the Price? It seems investors are more focused on Financial Assets & The state of the US Economy rather than Countries Gold holdings. 

James Cordier, CEO of a US based Options firm said "With stock markets looking to crash all over the worlds and the US economy growing slowly, nothing is pointing to rate hikes and that is why Gold will continue to rally" . 

However, as mentioned in posts prior - it is important to note that Gold does not pay a coupon like other competing assets, although the price elasticity (over the last 5 years) seems to have drawn Investors (especially Central Banks, like China, Russia and India) towards the Bullion. 

For the coming weeks, months / Central bankers like Kuroda and Draghi have key speeches scheduled (as well as NFP this week) which could further spur the rally in Gold as the consensus is for further tightening and talks of Negative interest rates and more uncertainty.  

As always, Trade Smarter

Anish @Anish8Fx 

Oil Crisis? Should We Now Buy Gold?

Ladies and Gentlemen

With a 17% fall in Oil since the start of 2016, the possibility of $20 oil becomes a real target for Investors, as we see major Hedge Funds exit the commodity.

Gold since August has been swung around in a tug of war, with Chinese equities on one side and a strong USD on the other. This pendulum has been relentless in the recent months, however with new lows in Oil prices, Gold continues to hold well in retaining it's safe haven status.

Gold has climbed 3.4% already in 2016 and investors risk aversion does not seem to be letting up. Geopolitical tensions persist in the Middle East and North Korea, as well as concerns about China's growth forecasts.  However, with a persistent strength in the USD forecasted for 2016, some analysts still call for sub $1,000 (per oz) Gold... as a "Competition for Gold" increases.

With Oil prices reeling from oversupply and Gold getting a small boost, Brent crude is now at the cheapest relative price in almost a generation.

Gold Vs Oil

But what is a "Safe-Haven"?   By Economic definition (as pointed out by James Steel, of HSBC) The Safe-haven inspired demand for Gold (and other precious metals) rests on the interconnection between  the state of the Gold Market and the Financial Markets of countries with long-term structural arguments for Gold accumulation (i.e. China and India) - and with this being said, HSBC forecast average Gold prices of $1,205 this year.

Mr Steel is looking more with a long-term view, as accumulations continue to rise. We always tend to think about Gold being a hedge on safety, however recently Gold has been more about uncertainty and a reflection of anxiety. Gold in a deflationary environment, may actually be likely to continue it's slide down.  2016 could well be the story of Central Bank delivery, especially as we are now risk-off as we strength in the Yen for example... but we hear nothing about the BOJ pushing back.

So Is Gold still a mark of uncertainty? Well the recent shocks coming from China did Send Gold immediately higher, which is reassuring to see.

I personally am long Gold, as I think it's safe-haven status will be the trend for 2016 but in the short-term we may remain bearish. I wish you all the best of luck with your Metals trading and as we all stay tuned to this theater of events in the World markets, I wish you safer trading.

Anish8Fx @ Atom8.com

How To Make A Camel Vomit Gold

Ladies and Gentlemen, 

Has Gold lost it's shine? Gold traded near a 5-year low as investors continued to short bullion-backed equities pricing in expectations for the US to increase interest rates this year, further Rusting the Metals Market. 

Gold is heading for a thirds year on year decline as investors now brace themselves for a first interest rate increase since 2006 and according to the "theory" - Higher Rates = Less competitive metals. But Why? It is simple, as the Metals offer no dividend, hence investors naturally flock to other assets that pay interest or offer dividends.

Can we head below $1000?
(Figure Below) Source : CNBC

What is now known as the "Vomiting Camel" (from the formation of the two humps [yearly highs]) - we now have the camel resting on a rhombus, indicating that a break below current levels =  free-fall! 

The Splat Zone indicated on the char signals towards the $700-$800 for possible areas that Gold could fall into post December hikes. 

But what about Central Banks, The Russians & Chinese - are they still buying? - Yes! Gold purchasing (And Demand) is at record highs, as both Russia and China still maintain a policy to hedge against their currency & they will probably remain net buyers. China for example, added an extra 14 tons in October. 

So what happened to Economics? Well, we have to remember that XAU is backed by the USD and experts point to a "Bear-Market" cycle driven by the FED. But in my view, if we do see a hit of $700-$800 we could see a spark in the bulls.

Absolutely a fascinating time to be watching the markets. 

Trade Smarter,

Anish8FX@Atom8.com

Still Holding My Gold Shorts

Ladies and Gentlemen, 

The Gold Market has been subject to huge downward pressures amid the timing of the FED's rate hike decisions. Gold now again hovers at 1-month lows, coming of the back of the biggest 4-day losing streak since September 2013 - falling 5 consecutive quarters. 


But even with soaring demand from Asia, why are the Markets so reliant on the FED decision? Well if the FED do increase rates, nobody wants stock hold bonds, because they will pay lower coupons than newer bonds... and turning to Gold - that asset pays no Coupon at all! The more hawkish the FED remain, the worse the impact on the Gold price. Not forgetting that Gold is still priced against USD.  

This close relationship was marked again today by this mornings rally to $1120 and was completely sold off and there are even more headwinds/failures in recent breaks to the upside. $1075 was the recent bottom and this is not far our of reach. I don't think we will see a reversal anytime soon to the upside. 

Figure below from Atom8's MT4 Terminal (XAUUSD.v) - Gold Staying Down 

When will we see a reveral? Here's hoping Ms Yellen gives some more indication tonight about future direction of the Hiking Cycle. Perhaps all that is needed for the Metals is some clarity, then we can move on & up! Theoretically, the FED could continue to hike rates up to infinity and that would cause USD weakness. Given historical trends, Gold could remain the preferred safe-haven asset & may well return back to $1400-1500 in the next few years. 

Best of Luck
Anish8FX @ Atom8.com 

Gold : A Mastermind of the "Break-Out" - $1300 by 2016?

Ladies and Gentlemen

The precious yellow metal is back in the spot light after forming a pretty dull range so far this year between $1200.00 / $1100.00 and the outlook has remained bearish. However, this has all changed in the past few days as the October Bull awakens to the more uncertain Economic landscape, especially breathing from the US & from increased Geo-political action (The Ruski's in particular)!

Gold (XAUUSD.v) is showing strength above 1170 (formed yesterday) and all my indicators are pointing towards a further bull offensive. The commodity must continue to trade & hold above it's broker resistance (turned support) at 1170 to really create more scope for strength heading into the final months of 2016.  On the other click, if you remain a bear in this market - support comes in more at the 1165 level, where a break down to 1150.00 will really slam the brakes again on the metal. Me personally, I am hoping for a break of 1200 as I really do miss the days of huge Gold daily volume.

fig: Atom8 MT4 Terminal

How high could we go?  After breaking a "key resistance" level, the investor sentiment is more positive and will probably attempt to push it to a high for year-end. Gold is now trading above it's 200-day MA for the first time since May & prices could be further buoyed by (what is now expected to be) weaker US data & that the FED are now looking to raise rates next year.

A call for above 1200.00 could be realistic by December and I would not be surprised if we even saw a move to the $1,300 mark - as volume for Metals expect to be double by next year (source : mining.com).

Best of luck Traders,

Anish @ Atom8.com

Is Gold powering to $1,000 per oz?

The biggest quarterly fall in Gold 

Growing prospects of the FED raising rates have kept this shiny metal posted below the recently tested $1,200oz mark and expectations of higher borrowing rates in the future has also helped to hold the price of this precious metal down, as it now struggles to compete with yield-bearing assets when rates are on the rise. 

A Fear-Based Asset

Firmer US data supported the biggest 2-day dollar move in recent times as the price of Gold fell to only find stability at around the 1170/80 levels. However, reports from Asia say there is still no stopping demand from price-sensitive customers. 

China's new $16bn Gold Fund

China's initiative to boost Gold trade is firmly embedded into their Economic policies.   The new entitiy may include an exchange traded fund for Gold and aims to raise about $16bn or £10bn in three separate tranches. 

This news could restore some Asian buying strength, struggling to offset the prospect of US rate rises.  China still remains the largest Gold producer and consumer of Gold (according to the World's Gold Council. However, the USA still holds the largest Gold Reserve. 

The Future of the Gold Price

If you ever like to know what the Banks think - Commerzbank expects a significant Gold recovery and pin the move lower down to "uncertainty" over rate rises - they expect Gold to be trading back at around $1,250 by 2016.... And moving forward, Chinese officials expect their activity in Gold trading will result in an extra $2.5 trillion in the next 10 years. 

My View

For the best part of the year I have remained bullish on metals, amidst the forthcoming FED rate raises.... and when shit hits the fan... it really does! I think we will still see a large reversal in the Metal as we continue to rest on a support of uncertainty. However, once clarity is restored.... I eye a move higher to the $1300 region. 

As always guys...... Trade Smarter.

Peace & Love - Anish

Russia's Barbaric Cry For A Gold Standard Currency

Putin's Love Affair

As Russia increases it's Gold buying by 123% this year as it continues to hedge against the notion of an unstated "Global Currency Crisis"... 

The perfect combination of geopolitical tension, stringent isolation, ruble depreciation & steady economic decline have forced the Federation to take a drastic step into adopting a Gold-standard currency. Albeit, pretty far-fetched, this blog post aims to break down the economic viability of a new Gold-exchange and why it is a possible step for Russia.

A Brief History 

The Soviet Union through the 40's and 50's viewed Gold & Silver as strategic metals and for National Security... Anybody holding Gold in a personal capacity would of been put in Jail.

Here is a picture of an Old Soviet Bank Note - reading "Currency backed by Gold, Precious Metals & Assets of State Bank". 

Russia aimed then and now to play hard-ball with the West - in protest against being held at mercy of the US Monetary policies - as they present their Gold backing as a Currency-War weapon. 

Russia recently overtook China in terms of Gold reserves whilst their economy remains structurally weak.  However, with supply threatened Oil prices along with several other falling energy prices & the depreciation of the ruble - A move to Gold will allow the country to be seen as a more efficient, perhaps a  more trustworthy trading partner. 

Strangling the USA 

An official move to Gold would be monumental and China would be more than likely to follow suit.... Huge threats of inflation would immediately flare upon the US Economy.... Ultimately, the Fed's worst nightmare.

A weapon of mass Financial Destruction 

Given the growing influences of Russia, China & other Asian states... a large accumulation of Gold indicates a move away from the USD for easier cross-border trade. 

But in reality....

What does the near-term have in store for Gold... Could this Russian buying spree come back and bite them in the ass? Will $1200 hold or could we see potential for lower commodity prices as the USD continues its endless bull run & lower Western % demand for metals. However, this does go against Putin's aim - which is based around using the Gold-backed Ruble to pay odd the countries debt. 

Another major drawback is that the Ruble is already heavily backed with Oil and it is pretty unlikely that they would back it with 2 commodities. 

What will a continuation of this buying spree cause? 

Yet continuing to threaten the US currency, Russia's growing stockpile of Gold would be aimed at taking away the US Dollar monopoly over the metal & with the BRICS on their side a realistic defiance against the threat of a US debt backlash could be on the cards. 

Are we prepared for this? 

If Russia's biggest Oil Tycoon could be reprimanded and sent to Jail... Could Putin too? Is Putin hedging his bets?....

Trading Gold with Atom8

As Gold continues to grip the $1200 handle... The market is waiting patiently for the next FOMC talk in June to decide on the next direction, as rate cuts linger... 

Atom8 offers XAUUSD and XAGUSD trading from 10 cents and 2 cents (spread + commission) respectively alongside leading DMA execution... it is a fine offering to check out.

Any questions or feedback would be greatly appreciated. As always, Peace & Love..

Anish

My Golden Strategy to Mastering the Markets

Mastering the Markets... The story of the Retail FX/CFDs Market

I have seen thousands of Trader's come & go....

Most get greedy, thinking they can repeat amazing Demo performance in the Live arena's & end up blowing up their accounts faster than they can say "PROFIT"... Some get into the markets way too early - especially after fancy FX education sales talk urging their clients to start churning accounts on a 3 pip EURUSD spread... More often than not they lose money on their first few trades & completely stop trading... Very few.... Actually make Money.

So what is the Secret?

Once over-complicated, trading becomes extremely difficult to digest. For me & from what I have seen, the key is to stick to a simple strategy that is proven to work.

Stay disciplined, keep your emotions at bay & never trade with money that you can't afford to lose (again a blunder that I see way to often)...

Patience & consistency are very much key, as it takes many years for those who are profitable (not lucky) to perfect their strategies - willing to risk a stake to support their development. Also -keep your expectations low... Most traders looking to make a "passive income" think they can do a consistent 10-20% a month - which is very unrealistic...

So... Step 1. Find a strategy that works & Step 2. Stick too it!

Time to share my Golden Secret... 

I am always keen to get personal with the guys making money from trading FX - & making money consistently. So I found a guy who made at least 14% per week and had been doing so for the past 60 weeks with a very simple strategy.

So I took the best bits from his strategy & formulated by own system (which is now running decently well on an automated basis)...

Going back to basics here.... but let's get straight to the point. Take a 3 day EMA and a 20 day EMA and but nice Bold colors on your chart. (I like to use yellow for the 3EMA and purple for the 20EMA) & look at a 30 Minute TF.... Something like this :

My rules 

As the 20EMA crosses above the 3EMA we have a short signal and as the 3EMA crosses above the 20EMA we have a long signal...

Somewhat simple... but you have to know which time frame to pick... I usually find that the 30M works ideally for Gold - especially when the market is trending well. However, it is important to avoid the choppy markets.

The key, therefore, is to study the "gradient" of the breakouts and have a fixed take profit amount in your mind before entering the trade.

 Live Example 

Let's take the breakout from this afternoon. A long at the cross-over of the 3>20 around $1195 would be up 70 cents profit right now...





So where do I take my profit now?

You have two options, you can either close when the 20 goes back above the 3 or you have a fixed 30 pip or 50 pip TP integrated within your strategy.

Remember - Avoid choppiness & essentially this trend following strategy works well once followed consistently on the correct time-frame. 

Would greatly appreciate your feedback & I hope this works out well for you guys.

Trading Gold with Atom8

We arguably offer the best conditions for XAU margin trading in the market. With spreads starting from 15 cents (raw) and commissions average $25 per million - Many sophisticated traders are enjoying our ECN conditions & with our FCA underlay... Atom8 aim to be the hub for the XAU trading community..

Check us out here www.atom8.com or email me with any questions you may have - anish.lal@atom8.com


- Peace & Love

Anish