Gold: Stay Long For 1280.00
Growth Aces | Jun 08, 2016 06:29AM ET
Gold: Stay Long For 1280.00
- Gold touched a fresh two-week high on Wednesday as the possibility of an early US interest rate hike appeared to dim following dovish comments by Federal Reserve Chair Janet Yellen earlier this week. Yellen gave a largely upbeat assessment for the US economy on Monday and said interest rate increases were coming, but investors focused on her lack of guidance about when.
- Weak US payrolls data, released last week, has boosted expectations that the Fed will stand pat on interest rates for the time being. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding bullion.
- The World Bank slashed its 2016 global growth forecast on Wednesday to 2.4% from the 2.9% estimated in January due to stubbornly low commodity prices, sluggish demand in advanced economies, weak trade and diminishing capital flows. This could also throw cold water on a possible Fed move.
- The world's biggest consumer of the yellow metal, China, kept its gold reserves unchanged, at 58.14 million fine troy ounces at the end of May, from the end of April, the central bank said on Tuesday. China still has enormous USD holdings and is likely to keep purchasing gold in order to diversify its forex reserves, which should serve as a supportive factor for the metal.
- We stay long for 1280.00 in the near term and 1335.00 in the long term.
GBP/USD: British Industrial Output Beats Expectations
- Sterling jumped to Wednesday's high after data showed industrial output in Britain grew at its fastest pace in nearly four years in April, beating forecasts. Industrial output rose 2.0% in April after a 0.3% rise in March, the biggest month-on-month increase since July 2012. Manufacturing output also rose at its fastest pace since July 2012, up 2.3% on the month after a 0.1% increase in March.
- Sterling, which hit a three-week low against a basket of currencies on Monday, has been hostage to opinion polls before a British referendum on whether the country stays in the European Union or not.
- Because of high volatility ahead of Brexit referendum, we think no position on GBP pairs is justified from the risk/reward perspective.
NZD/USD: RBNZ Decision Will Be A Close Call
- Investors are awaiting today’s decision of the Reserve Bank of New Zealand's (21:00 GMT) and we think the outcome will be a very close call.
- The central bank surprised markets in March when it cut by 25 basis points and said further reductions may be necessary given New Zealand's tepid inflation.
- In our opinion the central bank will not rush into cutting this time and prefer to reassess later in the year. The RBNZ has communicated that there are four things it is currently watching: dairy prices, inflation expectations, net immigration and house prices. Dairy prices remain under pressure but inflation expectations appear to have stabilized, while net immigration is picking up again and house price growth has accelerated.
- If the RBNZ keeps rates unchanged it could drive the kiwi strongly above 0.7000 against the USD. To help bring the NZD down, the RBNZ would have to deliver a very dovish and credible message that a further series of rate cuts is possible.
- We raised the target on our short-term NZD/USD long to 0.7085, but we also locked in profit at 0.6910. We keep our bullish view on the NZD/USD in the long term. The target in the investment part of the portfolio is 0.7300 and the profit is locked in at 0.6875.
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FOREX - MAJOR PAIRS:
FOREX - MAJOR CROSSES:
PRECIOUS METALS:
It is usually reasonable to divide your portfolio into two parts: the core investment part and the satellite speculative part. The core part is the one you would want to make profit with in the long term thanks to the long-term trend in price changes. Such an approach is a clear investment as you are bound to keep your position opened for a considerable amount of time in order to realize the profit. The speculative part is quite the contrary. You would open a speculative position with short-term gains in your mind and with the awareness that even though potentially more profitable than investments, speculation is also way more risky. In typical circumstances investments should account for 60-90% of your portfolio, the rest being speculative positions. This way, you may enjoy a possibly higher rate of return than in the case of putting all of your money into investment positions and at the same time you may not have to be afraid of severe losses in the short-term.
How to read these tables?
1. Support/Resistance - three closest important support/resistance levels
2. Position/Trading Idea:
BUY/SELL - It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level.
LONG/SHORT - It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level.
3. Stop-Loss/Profit Locked In - Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position.
4. Risk Factor - green "*" means high level of confidence (low level of uncertainty), grey "**" means medium level of confidence, red "***" means low level of confidence (high level of uncertainty)
5. Position Size (forex)- position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management!
Position size (precious metals) - position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size).
6. Profit/Loss on recently closed position (forex) - is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Profit/Loss on recently closed position (precious metals) - is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Source: Growth Aces - Forex And Precious Metals Trading Signals
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