Analysis and Recommendations:
Gold fell below the crucial 1700.00 range today. As investors position themselves for Tuesday FOMC statement and Fed decision. Investors have also been slowly moving to riskier assets now that Greece is dealt with. There has been little in the way of economic news from around the world, except for the disappointing numbers out of China over the past few days. Oil is also trading down today.
Last week China released several economic reports, all having negative sentiments or lacking strong support. These included,
China's consumer price index rose at a weaker-than-expected rate of 3.2% in February from the same month a year earlier. The producer price index for February came in at 0%, also weaker than expected and slowing from January's 0.7% year-on-year increase. Also China's industrial production and retail sales growth weakened in the first two months of 2012 from the year-earlier period, an official data release showed Friday. Industrial production for the January to February period climbed 11.4%, falling short of a 12.4% increase anticipated.
This data culminated over the weekend when China posted a trade deficit of $31.48 billion in February after reporting a $27.28 billion surplus in January, according to data released by the General Administration of Customs on Saturday.
China's central bank governor says the yuan is approaching fair value against foreign currencies, while also pointing out it is too early to tell if the nation's trade deficit in February is the start of a important trend.
March 12, 2012 Economic Releases actual v. forecast
Core Machinery Orders (MoM)
Malaysian Industrial Production (YoY)
Indian Industrial Production (YoY)
German WPI (MoM)
Italian GDP (QoQ)
German 6-Month Bubill Auction
Scheduled Economic Events for March 13, 2012
13:30 USD Core Retail Sales (MoM) 0.8% 0.7%
13:30 USD Retail Sales (MoM) 1.0% 0.4%
(Core and ) Retail Sales measures the change in the total value of sales at the retail level in the U.S., excluding automobiles. It is an important indicator of consumer spending and is also considered as a pace indicator for the U.S. economy.
19:15 USD Interest Rate Decision 0.25% 0.25%
19:15 USD FOMC Statement
Federal Open Market Committee (FOMC) members vote on where to set the rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation. Along with the Decision the U.S. Federal Reserve's Federal Open Market Committee (FOMC) statement is the primary tool the panel uses to communicate with investors about monetary policy. It contains the outcome of the vote on interest rates, discusses the economic outlook and offers clues on the outcome of future votes.
01:01 GBP RICS House Price Balance -14% -16%
The Royal Institution of Chartered Surveyors (RICS) House Price Balance measures the percentage of surveyors reporting a house price increase in their designated area. A level above 0.0% indicates more surveyors reported a rise in prices; below indicates more reported a fall. The report is a leading indicator of house price inflation as surveyors have access to the latest price data.
09:15 CHF PPI (MoM) 0.3% 0.0%
The Producer Price Index (PPI) measures the change in the price of goods sold by manufacturers. It is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation
10:30 GBP Trade Balance -7.8B -7.1B
The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.
11:00 EUR German ZEW Economic Sentiment 10.5 5.4
11:00 EUR ZEW Economic Sentiment 3.8 -8.1
The Zentrum fur Europaische Wirtschaftsforschung (ZEW) Economic Sentiment Index rates the relative six-month economic outlook for the euro zone. On the index, a level above zero indicates optimism, below indicates pessimism. It is a leading indicator of economic health. The reading is compiled from survey of about 350 German institutional investors and analysts.
13:30 EUR ECB President Draghi Speaks
Mario Draghi (born 3 September1947) is an Italian banker and economist who has been governor of the Bank of Italy and succeeded Jean Claude Trichet as President of the European Central Bank starting November 2011. As head of the ECB, which controls short term interest rates, he has more influence over the EUR value than any other person. His comments may determine a short-term positive or negative trend.
Government Bond Auction Schedule (this week)
Mar 13 09:30 Netherlands Eur 2.5bn-3.5bn re-opened Apr 2015 DSL
Mar 13 10:10 Italy BOT auction
Mar 13 10:30 Belgium Auctions 3 & 12M T-bills
Mar 13 15:30 UK Details gilt auction on Mar 22
Mar 13 18:00 US Auctions 10Y Notes
Mar 14 10:10 Italy BTP/CCTeu auction
Mar 14 10:10 Sweden Auctions T-bills
Mar 14 10:30 Swiss Bond auction
Mar 14 15:30 Sweden Details nominal bond exchange auction on Mar 21
Mar 14 18:00 US Auctions 30Y Bonds
Mar 15 09:30 Spain Obligacion auction
Mar 15 09:50 France BTAN auction
Mar 15 10.30 UK Auctions 4.5% 2042 conventional Gilt
Mar 15 10:50 France OATi auction
Mar 15 16:00 US Announces auction of 10Y TIPS on Mar 22
Just a heads up since gold is volatile and will react to most economic indicators we will begin to post the daily calendar with events that could affect the price of gold. The gold price is sensitive to a number of scheduled U.S. and Euro area macroeconomic announcements-including retail sales, non-farm payrolls, and inflation. Gold's high sensitivity to real interest rates and its unique role as a safe-haven and store of value typically leads to a counter-cyclical reaction to surprise news, in contrast to their commodities. It also shows a particularly high sensitivity to negative surprises that might lead financial investors to become more risk averse.
These results have a number of implications. To reduce the uncertainty of the return on gold transactions, traders may wish to time their orders flow so as to avoid the release of information that has been shown to affect prices. For longer-term market participants, these results provide confirmation of the pro-cyclical bias of many commodities and gold's role as a safe-haven during periods of economic uncertainty.
Gold Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3