Monday, June 22, 2015

Gold – Evening Star Forming as Resistance Holds

Golds rally on Thursday on the back of a weaker dollar looked like it could be enough to take it through the double bottom neckline, which could have projected it towards $1,226.50, as noted last week (Gold – Double Bottom Forms on Dollar Weakness).

Gold daily

A failure to significantly break through the neckline though, a level which coincided with a recent area of support and resistance, was followed by a day of indecision and a very bearish looking session today.

Assuming we don’t see a strong recovery in the yellow metal, with it closing back above $1,993.71, the resulting formation will be an evening star, a strong bearish setup. The fact that it has formed on a resistance level is another strong signal.

If we can see a break below the bottom of the flag now, it would strongly suggest the bullish resistance that drove the rally on Wednesday and Thursday has been severely weakened.

If this happens, based on how it’s traded in the past, it may run into strong support in the $1,162-1,170 region. Below here, $1,131.50-1,142.75 may offer further significant support having done so on each of the three times it’s been tested recently. A break below here would put Gold at its lowest level since April 2010.

Slovak PM Says Keeping Greece in EU is Better Option

Slovak Prime Minister Robert Fico said on Monday he believed it was better to keep Greece in the euro zone than it was to let it fall out.

“I believe that, at the end of the day, at least politically we will come to a conclusion that Greece remaining in the euro zone has more advantages at this moment than disadvantages,” Fico said. Slovakia’s position on Greece has been that it wanted to see Greece stay in the euro zone, but not at any cost.

Euro zone officials welcomed Greek concessions on Monday as a possible step towards a deal on averting a default, but politicians dismissed expectations of a breakthrough at a leaders’ summit later in the day to secure the country’s future in the euro. (Reporting by Tatiana Jancarikova; Writing by Jason Hovet; Editing by Larry King)

via Reuters

FTSE Higher on Greek Debt and M&A

Hopes of a deal to solve Greece’s financial crisis and a spate of takeover talk have between them helped lift markets from their recent doldrums.

The FTSE 100 is currently up 80.46 points at 6790.9, although off its best levels on talk that Greece had last night submitted the wrong document to its eurozone partners. The original document had apparently gone some way to breaking the deadlock between Greece and its creditors, so a hitch of this nature has revived the doubts about whether a deal will actually be done.

Meanwhile Sky has jumped 44p or 4% to 10.82 following a Sunday Telegraph report that the Murdoch family had turned down offers from Vivendi and Vodafone for their stake in the business. The Murdochs apparently wanted 18 a share for their 39% in the satellite broadcaster, which appears to have been a sticking point.

Analysts at Liberum said a deal might still happen given the issue seemed mainly about price, but despite reports Murdoch’s Fox might decide to make a bid itself, Liberum believed this seemed less likely:

(1) Both [bidders] seem credible…although there are limited synergies trans-borders for pay-tv (Vivendi has Canal+, the main French pay-tv operator) and it makes more strategic sense for Vodafone to own Virgin Media as it gives its own broadband infrastructure.

(2) the fact that the talks reportedly broke down over price rather than the principle of selling the stake suggests the Murdochs are open to a deal.

(3) it suggests a bid by Fox for the rest of Sky is less likely – it would be hard for Fox to argue that Vivendi should pay 18 a share for Sky without offering a similar amount to other shareholders, and we do not see Fox doing this.

via The Guardian

BOJ Warns Factory Output Lower in Q2

The Bank of Japan said it expects factory output to fall for the first time in three quarters in April-June on weak Asian demand, underscoring the fragile nature of the economic recovery.

Industrial production rose 1.5 percent in January-March from the previous quarter, helping the world’s third largest economy expand much faster than expected.

But the central bank offered a cautious view on the outlook for output, saying it may have briefly hit a soft patch as automakers see domestic inventories build up and steelmakers feel the pinch from sluggish Asian demand.

Industrial production will increase moderately reflecting domestic and overseas demand, albeit with some fluctuations,” the BOJ said in a monthly economic report released on Monday.

The central bank also warned there was “high uncertainty” on its forecast that output will rebound in the third quarter.

via Reuters

BOJ Kuroda Says CB Has Means to Reach 2% Target

Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank has ample means to achieve its goal of accelerating inflation to 2 percent and keeping it there in a stable manner.

Speaking in parliament, Kuroda said raising the 0.1 percent interest the BOJ pays on excess reserves parked with the central bank could be one option if the BOJ were to exit its massive stimulus program.

But he stressed that it was premature to debate a specific exit strategy now because how best to end the stimulus program depends on economic and financial developments at the time.

via Reuters

Gold Falls as USD Rises and Greece in Focus

Gold eased on Monday as the dollar rose and as European equities jumped on possible signs of progress in Greek debt talks, which curbed safe-haven demand for the metal.

Spot gold had slipped 0.6 percent to $1,192.01 an ounce, about 1 percent below its highest level since May 26 at $1,205.50 hit last week after a dovish Federal Reserve message on the timing of a U.S. interest rate rise.

U.S. gold futures for August delivery were down $9.90 at $1,192.00 an ounce.

Gold is typically regarded as a good bet in times of financial and economic uncertainty, but traders have seen modest demand over the past few days from investors concerned about the Greek debt crisis.

“It is difficult to call on Greece, we haven’t seen much buying above $1,200 and wider financial markets are hopeful that there will be a last-minute solution that will avoid a Greek default,” Societe Generale analyst Robin Bhar said.

via CNBC