Gold Stuck In Rut – For How Long?

The first quarter of 2018 has given very little excitement to those who trade Gold. Prices have been range bound in a tight area around the highs of the early 2016 rally.

There’s some resistance up here, and it seems like the price is waiting for a catalyst to decide what happens next.

It’s entirely possible that the catalyst will be something as simple as sentiment.

As Adam Hamilton has noted in his latest essay Gold mining stocks are struggling for traction. Even though Gold prices are at a high area of the past few years.

Adam comments, “The gold miners’ stocks remain deeply out of favor, trading at prices seen when gold was half or even a quarter of current levels.  So many traders assume this small contrarian sector must be really struggling fundamentally.  But nothing could be farther from the truth!  The major gold miners’ recently-released Q4’17 results prove they are thriving.  Their languishing stock prices are the result of irrational herd sentiment.”

Could it be that investor sentiment is holding back Gold prices from continuing to climb?

Sentiment could well be suffering as investors are hesitant on the Fed’s interest rate policy. Interest rates were hiked at the back-end of 2017, and speculators seem to think that the intended range is higher than the 1.5% right now. Maybe at or above 2% is where some commentators think rates are heading.

This, coupled with a volatile stock market, could be why those pesky Gold mining stocks are languishing behind a relatively strong Gold price.

There’s another monetary policy meeting on the horizon, so it will be interesting to see what the comments are. It’s probably the catalyst Gold is waiting for.

from http://www.livecharts.co.uk/livewire/2018/03/gold-stuck-in-rut-for-how-long/

Ibex Rally Continues After Weekend News On Catalan Region

The Spanish Ibex index has made some incredibly strong moves since Monday. After the announcement by the Madrid government to remove the power of the Catalan leaders which held the “illegal” referendum on independence.

From a close down below 10,200 on Friday the Ibex index has moved steadily higher to near 10,600 in early trade on Tuesday.

The move by Madrid to remove the power of the Catalan government is seen as bullish for stocks which were being held back by uncertainties surrounding the issue.

Kathleen Brooks, from City Index said: “Spanish markets are in recovery mode at the start of this week. Although this is a fluid situation there are a few things that are keeping the markets calm, which is why EUR/USD is back above 1.16 and the Ibex is the best performer in European equity markets”.

With the DAX index heading towards new all-time highs and the FTSE 100 consolidating up near October highs, it would not be beyond the realms of possibilities at the IBEX index could continue up much higher over the coming months.

The Ibex made an all-time high up above 11,000 in early summer. If the pattern of other stock indexes is to be followed then the ibex could play catch up fast. Especially if the news continues that Madrid is to create stability in the region.

Here you can see on the daily chart the down trend line that has clearly broken, and the all-time high above. Whether it heads straight there remains to be seen.

One thing is for sure is that this volatility will continue for some time yet, and you could find some excellent trading opportunities along the way.

from http://www.livecharts.co.uk/livewire/2017/10/ibex-rally-continues-after-weekend-news-on-catalan-region/

Dow Jones Stumbles and Reverses on Fed Unchanged Interest Rate

The US federal reserve released their quarterly interest rate decision in the United States. They left rates on hold for the next period but hinted at a rate hike maybe on the cards before the end of this year.

Once again the Federal Reserve suggested that interest rates are due to rise again. Even though inflation has been falling this year, which was an admitted surprise, reporters were told on Wednesday that the economy is strong enough to handle another hike. Janet Yellen suggested they expect that the strength of the economy will warrant further increases in rates.

The federal reserve also suggested that the economy is strong enough to begin reducing the balance sheet. The $4.5 trillion balance sheet which came about from the stimulus program when the economy and recession hit, will begin unwinding in October.

According to the Fed. Business is getting stronger, hiring is strong, people are spending once again and projected a healthy 2.4% growth this year.

While the signs for further interest rate increases are apparent the Fed did not change the base rate yesterday. We can probably expect another rate increase by the end of this year, and three more are expected as we move into 2018.

Even though the stock market took an initial small tumble on the news that rates were left on hold, they soon recovered and ended higher, with the Dow Jones making (yet) another all time high.

Gold prices reacted strongly to the downside on this news. It immediately fell and broke the magical $1300 barrier. Whilst $1300 is not a major support, it is a round number and a significant number to break.It remains to be seen whether Gold can recover and attack the August highs again.

US dollar was strong after their interest rate announcement. US dollar versus the Japanese yen rose 112.50, and seems like the trend is most certainly up for the foreseeable future.

from http://www.livecharts.co.uk/livewire/2017/09/dow-jones-stumbles-and-reverses-on-fed-unchanged-interest-rate/

CAD: Canadian Dollar Strength and US Dollar Weakness

On the foreign exchange market Wednesday things began slowly. Mixed moves from the major currencies meant choppy trade until data from the West arrived.

Things became more volatile as the Bank of Canada (BoC) moved rates by 0.25 to 1%. This sparked some life into the Canadian Dollar, and in turn its US cousin. A swift move of over 250 pips ensued for the USDCAD pair, as it hit a low on the day of 1.2129.

Overnight weak trade balance data out in Australia couldn’t really dampen the spirit of the AUD. Which held in the high range, 0.8000, against the US Dollar. That could come in to scrutiny today as US unemployment data arrives, and could breathe some life into the current weak greenback.

But today is all about the Euro. After midday UK time today the ECB will announce the minimum bid rate, and will be followed by a meeting and press conference. Draghi is most likely going to shed some light on the ECB’s thoughts on the Euro, and a strong address could see some volatile moves as the US opens for trading.

The weakness in the US Dollar also helped Cryptocurrency Bitcoin gain some ground. After 4 down days, a little light relief came as the price of Bitcoin headed back towards the early month high.

From a technical perspective Bitcoin seems to have re-tested the previous high, possibly creating an area of support. If it can now go on to make a new high, then maybe just maybe this rally is not yet over. The chart below shows the level clearly.

Ethereum was making similar moves, mirroring the strength in Bitcoin and aided by a weaker US dollar. Again the last two days have seen it make a back test of the early August highs, and is now making a move up once again. Whether new highs will follow remains to be seen.

from http://www.livecharts.co.uk/livewire/2017/09/cad-canadian-dollar-strength-and-us-dollar-weakness/

Mining Sector Shares – Fresnillo, Kaz Minerals and AAL

After a torrid time during 2014 and 2015, stocks in the mining sector made some good recoveries during 2016 and early 2017. Some spectacular gains were made by the major players, even the juniors and small caps got in on the action.

Then came spring 2017, and those stars of 2016 began to fall once again, which was inevitable after such a strong and sustained rise. However, recently the mining sector index made a small double bottom pattern from a previous support level. See the chart below. Is this the beginning of another leg up in this recovery, or just a stall before falling further?

A lot depends on precious and base metal prices. Gold and silver prices have been in steady decline over the last few months, which in turn reflects directly into values of those mining stocks who rely on higher prices. Conversely, Copper has been heading up and right now is sitting the mid-level of 2015 prices. Companies who mine copper have performed a lot better.

Charts and Comments on Companies

Fresnillo is one such company who needs Gold to be strong. If you see the chart below, we have compared FRES (Red) to Spot Gold (Blue). The peaks and troughs are simple to see. Higher Gold prices equates to more profit for FRES.

Kaz Minerals doesn’t seem to be suffering from the slow-down in the mining sector. KAZ is focused on Copper, and recently stated in a new release, “KAZ Minerals is delivering industry-leading production growth as promised to the market and was among the lowest cost copper producers globally in 2016.”

The chart shows that strength, not only with Copper prices on the rise but also the company doing great.

Anglo American share price has mirrored the mining index very closely. We can only assume because it has such a diverse set of metals and minerals that it produces. It mines Platinum, Iron, Copper and Diamonds among others. AAL share price has been making gains over the last month, but would need to make progress above 1200 to get investors talking about the possibility of new highs in 2017.

from http://www.livecharts.co.uk/livewire/2017/07/mining-sector-shares-fresnillo-kaz-minerals-and-aal/

Deutsche Bank lifts HSBC target price, retains 'hold'

Deutsche Bank bumped up its target price on shares of HSBC, hailing the restart of dividend payments in the US but cautioned that investors would need to be patient when it came to expectations for capital upstreaming from the States.

Analysts David Lock and Stephen Andrews welcomed the first dividends from HSBC's US unit in nearly 10 years.

While symbolic, they expected it would help fund future buybacks.

As well, they said the lender's first quarter results printed ahead of analysts' estimates, helped by a better performance from life insurance manufacturing and investment distribution.

However, commentary from management on the pace of capital upstreaming from the US was absent.

Lock and Andrews said it would still take more than three years for between seven to eight billion dollars of excess capital in the US to be returned to the holding company.

Full version:  http://www.livecharts.co.uk/share_prices/Deutsche-Bank-lifts-HSBC-target-price--retain-news25916964.html

Santander shares slip despite beating first quarter forecasts

Spain's largest lender posted better-than-expected quarterly profits thanks to a strong performance in almost all regions - especially in Brazil, UK and Spain - and a drop in its non-performing loan ratio.

Net profits at Santander jumped 14% during the first three months of the year to reach 1.87bn, edging past the consensus forecast from FACTSET for 1.847bn. Mexico was one weak spot, with results down 3% in comparison to the prior quarter. At 11.3bn top line growth was 5% ahead quarter-on-quarter, with costs just 1.6% higher versus the fourth quarter of 2016 and loan loss provisions stable.

Its net interert income improved 10.2% year-on-year to hit 8.402bn while its non-performing loan ratio dropped from 4.33% one year ago to 3.74%. Together, the above saw it return on tangible equity rise by 100 basis points to 12.1%. driving an 11 basis point improvement in its common equity Tier 1 ratio to 10.66%.

Santander reiterated its commitment to lift its CET1 ratio by roughly 10 basis points per quarter.

Full version: http://www.livecharts.co.uk/share_prices/Santander-shares-slip-despite-beating-first-q-news25853207.html