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Only Direct selling of Cyprus Gold to Central Banks can slowdown fall – April 11

April 11, 2013

GMT 3:20 – Early release of FOMC minutes was certainly not a good omen for many traders creating doubt that it may have minimized the real impact of the FED minutes and it is yet unclear if someone took advantage of information (insider trading). I can tell you that in such a situation no one will disclose details or tell the real truth to protect the integrity of an institution and benefit of doubt should be given that it was human error not intentional.

FED FOMC gave mixed signal, but the urgency to halt FED asset purchase by one member and and few wanting to slow down mid  -year could mean its is a matter of few months and we could close to unwinding. Coming US economic data will provide further clue about the direction on economy. I will not take last non-farm payroll data seriously because of quite few factors that may have altered the data. There is a huge possibility of data revision and further good numbers will surely change the sentiment. I think next FOMC meeting may have a different story to tell.

Meanwhile, release of ECB monthly report will be important guideline for the European economy, though Draghi in his last week’s appearance after the MPS announcement had indicated regions ongoing economic sufferings. So European economic worry is likely to continue. Today’s release of US jobless claims data today will be another important economic indicator that may set the tone. 

Gold took the beating and it is likely to remain under pressure, as banks and hedge are making constant downward adjustment. News that Euro 400 million bailout contribution will be made by Cyprus by selling gold reserves is a bad signal for the market, as it will provide excess gold in the market. There are quite a few factors that goes against gold, George Soros offloaded his gold portfolio, hedge funds, banks and financial institutions are making downward adjustment of gold price. India faced with rising deficit had to increase duty on gold to discourage excess gold buying. 

Most importantly, after the FED FOMC minutes all eyes will be on US economic data, as one-month poor non-farm payroll data dose not decide the fate of US economy and in my view, further evidence of strengthen of US economy will add pressure for reduction or unwinding of Fed’s asset purchase plan, which could be extremely bad news for gold bulls. But we have to watch the developments in Japan keenly that is following the the footstep of USA, as it has recently announced extra ordinary easing policy that BOJ’s liquidity injection does not go waste like USA, as the purpose of funding is not to encourage speculative trades, but the money is meant for stimulation of Japan’s economy.     

I am sure, Central Banks that are major gold buyers will be watching the trend and may refrain from buying in present time, because no goof will buy when all indicators are pointing to a declining trend. Yes, one factor that can provide temporary support to the Yellow metal is direct selling of Cyprus gold reserve to another Central Bank.

However, I am bearish for gold and have been warning since last 4-months that gold prices will ease. I remain bearish for gold, as I have every reason to believe that gold price is over valued and is bound to fall.

 

GMT 3:20 – EURO @ 1.3057 = If 1.3010-20 holds we could see an attempt towards 1.3105, break may encourage for 1.3135. However, as long as 1.3180 hold see risk for a fall. Break of 1.2960-70 will open gates for deeper fall. 
GMT 3:26 – GBP @ 1.5328 = As long as 1.5270 holds we could still see another attempt towards 1.5350-60 or could stretch up to 1.5390. However, I would prefer to wait to pick the top to sell, as 1.5420-30 should not surrender.
GMT 3:30 JPY 99.50= As long as 99.10-15 holds we could a test of 99.95-00 or else 98.70 before Japanese currency further eases. Prefer pick on the rise and sell JPY.
GMT 3:32 – AUD @ 1.0509 = No change in view, though could see 1.0460-70 to hold, but would sell around 1.0535-40,as strong resistance is at 1.0580.
GMT 3:51 – GOLD $ 1561 = Sold hold around $ 1563-65 for a drop to $ 1551-53 levels, losses could extend. Upside break of $ 1572 may encourage for  a test of $ 1580 zones before down again. Medium – Term Target is $ 1525-30

Catch me on Twitter   @asadcmka ………………………

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