Gold Prices 'Bullish' on Technical Analysis & Interest-Rate Outlook as Greek Bail-Out Talks Resume

GOLD PRICES clipped a 1.8% overnight jump in London trade on Tuesday, holding at $1232 per ounce as Western stock markets fell sharply.
Gold priced in Euros touched 3-day highs at €1087 per ounce as Greece’s economy minister George Stathakis said Athens will fail to raise the €50 billion planned from privatizing state assets, with the true figure nearer €15bn.
Greek unemployment slipped in March to a 2.5-year low of 25.6%, the highest in any OECD country, with almost 1-in-2 people aged 16-25 now out of work.
Five years after its debt crisis crippled the economy, more than half of Greek employees would consider working abroad, according to a survey from recruitment firm Randstad Hellas.
IMF and fellow Eurozone-state officials began new negotiations with Athens over its bail-out program on Monday.
Gold’s “solid end of quarter…resembles a bullish engulfing pattern,” says the latest chart reading from Stéphanie Aymes’ technical analysis team at French investment and bullion bank Societe Generale
“More importantly, this pattern took place in the vicinity of the multi-decade channel [rising to $1045 from the 1980 high of $850 per ounce] and the down sloping one since 2013, which gives additional credence to our long-term scenario of gold possibly bottoming out.”
SocGen's long-term chart of gold prices
“Spot gold has been correcting lower,” agrees technical analyst Karen Jones  in  her weekly chart book for German financial services group Commerzbank, “[and] we remain of the opinion that this correction has ended at $1208.
Last Friday’s “weekly close above $1201 has completed a large falling wedge pattern which offers an upside measured target to $1450 longer term.”
Monetary policy “should [also remain] fairly favourable to non-interest bearing precious metals into the medium term,” says analyst Jonathan Butler at Japanese conglomerate Mitsubishi, noting that “by the end of the week the direction of monetary policy in two major economic blocs will become clearer” as the US Fed and then the European Central Bank release minutes from their latest meetings.
Fewer than 1-in-5 contracts for Fed Funds futures now bet that US interest rates will end 2016 at 1.0%, with the probability of no change from the current 0.5% rate rising above 1-in-3.
Shorter term, “The market has now priced out any possibility of an April rate increase,” Mitsubishi’s Butler tells Bloomberg News, “and the doves seem to be winning the day.”
The United States’ trade deficit with the rest of the world widened in February on a jump in imports, new data showed Tuesday, yawning another 2.6% to $47.1 billion.
Shanghai gold prices meantime closed the day at a $4 discount to London quotes on weak trading volumes, deterring new imports to the world’s No.1 consumer nation as the Chinese Yuan edged back on the FX market following yesterday’s Ching Ming holiday.
Chinese-owned ICBC Standard Bank was reclassified Monday as a “market making member” of global trade body the London Bullion Market Association, requiring to quote two-way prices to fellow market makers for large orders throughout London hours.


This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.

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