21/05/15
Hello all, I decided to delay this week’s report to accommodate the release of April's FOMC minutes this morning. After reading them however I’m not sure I should have bothered, there’s little to get excited about. The minutes show several members cast doubt on the likelihood of a June rate hike, which came as no surprise, but didn’t fully rule it out. There’s been contraction in US growth in the first quarter of the year, which was put down to bad weather and a strong US dollar. Expectations are that the US economy should show signs of accelerated growth, which could raise the chances of a September rate rise. I’m still picking later than this.
There was little reaction in the Precious metals markets, with Gold futures closing up US$2.60 on the day to US$1,209.30 per ounce, down from the pre-FOMC level of US$1,212.30. Trade has ranged from US$1,202.7 to $1,213.2 over night. If you recall last week’s report I noted that Gold prices were forming a wedge pattern, comprising of lower highs and stable lows. This setup usually signals a break out pattern, which was realised last week when Gold burst US$1210 resistance last Wednesday, spiking to $1232 by Monday in very short order. Now that we’ve broken our old predictable trading ranges, I believe we’re now in a new higher sideways trading range. I’m expecting the US$1200 -1205 level to establish a new base, with Gold prices struggling at the 200 day moving average of circa US$1225- 1230 resistance level. Silver should also follow suit, after finally breaching US$17 resistance. This isn’t to say that we can’t retest lower levels, it just seems less likely that we will stay down for too long. It’s a matter of what can’t go down must go up.
We’ve seen the continued benefits of a weaker NZ dollar, edging precious metals higher in NZ terms. Over the past month the NZD has given up 4.2%, touching intraday lows overnight of 0.7281. The Kiwi opens this morning below 0.73, buying just 0.7298 U.S cents. We’re now on the cusp of breaching 12 month lows as attentions turn to todays Annual budget release and key U.S manufacturing and housing data for direction and support.
By Adam Van Sambeek, Treasury Manager
Hello all, I decided to delay this week’s report to accommodate the release of April's FOMC minutes this morning. After reading them however I’m not sure I should have bothered, there’s little to get excited about. The minutes show several members cast doubt on the likelihood of a June rate hike, which came as no surprise, but didn’t fully rule it out. There’s been contraction in US growth in the first quarter of the year, which was put down to bad weather and a strong US dollar. Expectations are that the US economy should show signs of accelerated growth, which could raise the chances of a September rate rise. I’m still picking later than this.
There was little reaction in the Precious metals markets, with Gold futures closing up US$2.60 on the day to US$1,209.30 per ounce, down from the pre-FOMC level of US$1,212.30. Trade has ranged from US$1,202.7 to $1,213.2 over night. If you recall last week’s report I noted that Gold prices were forming a wedge pattern, comprising of lower highs and stable lows. This setup usually signals a break out pattern, which was realised last week when Gold burst US$1210 resistance last Wednesday, spiking to $1232 by Monday in very short order. Now that we’ve broken our old predictable trading ranges, I believe we’re now in a new higher sideways trading range. I’m expecting the US$1200 -1205 level to establish a new base, with Gold prices struggling at the 200 day moving average of circa US$1225- 1230 resistance level. Silver should also follow suit, after finally breaching US$17 resistance. This isn’t to say that we can’t retest lower levels, it just seems less likely that we will stay down for too long. It’s a matter of what can’t go down must go up.
We’ve seen the continued benefits of a weaker NZ dollar, edging precious metals higher in NZ terms. Over the past month the NZD has given up 4.2%, touching intraday lows overnight of 0.7281. The Kiwi opens this morning below 0.73, buying just 0.7298 U.S cents. We’re now on the cusp of breaching 12 month lows as attentions turn to todays Annual budget release and key U.S manufacturing and housing data for direction and support.
By Adam Van Sambeek, Treasury Manager
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