Gold Dips Ahead of Fed Policy

Gold has edged lower in relatively quiet trading ahead of the Fed policy statement at 2:00ET. The yellow metal remains in close proximity to the 5-month high established last week at 1307.59.Pervasive growth risks and deflationary pressures have resulted in further policy easings from a number of central banks in recent weeks. The Fed is widely expected to indicate that they will remain constant with respect to their first rate hike, but if the aforementioned risks persist, a rate hike this year may well be off the table already. FOMC is unlikely to admit to this, investors will be eying the language very closely for clues to that effect. American business, and therefore the Fed, are assuredly becoming increasingly troubled by the recent dollar strength. The Fed is likely to say something to temper the greenback's rally.On the other hand, the Fed may realize the the greatest economic threat right now is Europe. The EU may need a weak euro more than the Fed needs a weaker dollar, so they may have made a calculated decision to bide their time until the European situation stabilizes.

A rate hike this year would result in monetary policy that is too divergent. Doubleline's Jeffrey Gundlach said yesterday that a rate hike in June would be "disastrous". I think as hawkish as the Fed gets in 2015 is to hold steady on policy.The U.S. is the third largest gold producer, after China and Australia. There are lots of mines in Nevada produced more than 80% U.S. gold. Whereas other famous U.S. gold mines are located in Colorado and Alaska. Its official gold holdings are 8,133.5 tons which is the largest official gold holdings in global.American gold market was developed in the middle of 1970s, mainly the COMEX division of New York Mercantile Exchange, and later was incorporated into the CME. American gold market mainly trades gold futures, currently it becomes the world's largest trading volume and most active gold futures market, it also is the most efficient and complex futures trading organization. Its major trading objects are gold, silver, copper, and some financial derivatives. The transactions of gold futures and gold options are on the top of the world, are also recognized as the trading center of precious metals. At present, the varieties transactions contain gold futures, Mini options, options and funds.

KIM KARDASHIAN LAUNCH OF THAT MAGAZINE

Kim Kardashian, you know that she is very, very famous. Some would say that's all you need to know. She has 25 million Twitter followers, about a million less than Oprah Winfrey and nearly 5 million more than CNN Breaking News. Her Instagram account, where she is a prolific purveyor of selfies, is the site's third most popular. You can't walk through a supermarket without glimpsing her on a multitude of tabloids whose headlines holler about her relationships, her parenting style and the vicissitudes of her ample curves. She is variously seen as a feminist-entrepreneur-pop-culture-icon or a late-stage symptom of our society's myriad ills: narcissism, opportunism, unbridled ambition, unchecked capitalism. But behind all the hoopla, there is an actual woman -- a physical body where the forces of fame and wealth converge.

She looks exactly the same in person as she does in photographs or on television, with one exception: she is smaller than she appears in images, with tiny, almost doll-like ears and feet and hands. Everything else about her seems amplified, tumescent. Her black hair is thicker than any you have ever seen, her lips fuller, her giant Bambi-eyes larger, their whites whiter, and the lashes that frame them longer. But that's not to say it looks real, either. She is like a beautiful anime character come to life.

The rap on Kim Kardashian is that she has done nothing to merit her fame. But the longer I steep myself in the ambience of her pleasantly languid manner and hologram-perfect looks, the more facile this charge begins to seem. Of course, she has cannily leveraged that fame to build, with her sisters, a beauty-industrial complex, which includes a clothing line, a makeup line, a line of tanning products and seven perfumes. Her mobile app, Kim Kardashian: Hollywood, in which players climb their way to A-List status under Kardashian's tutelage, has earned over $43 million since its debut in June.

Gold Surges to Approach $1294

Gold continues its march higher amid rising risk aversion. The yellow metal has extended to new 5-month highs, nearing the $1300 level.The IMF downgraded their global growth outlooks for both 2015 and 2016. The IMF now sees growth in 2015 at 3.5%, down from their expectations of +3.8% back in October. Growth for 2016 was cut to 3.7%.The IMF's chief economist, Olivier Blanchard, also expressed concern about deflation. He warned that deflation could reignite the eurozone debt crisis.

Expectations that the ECB will announce QE later this week is also helping to push gold higher, as it becomes increasingly evident that the era of easy-money is a long way from being over. Saxo Bank's CIO and chief economist, Steen Jakobsen, also worries that the end-game for central banks has commenced.Noting last week's extraordinary surprise move by the SNB, Mr. Jakobson wrote the following in a report republished at ZeroHedge:
Many central banks will envy the SNB for its move last week, as it at least tries to regain some control of its future, but the conclusion remains: central banks have as a group lost credibility and when the ECB starts QE this week the beginning of the end for central banks is completed. They are running out of time – that’s the real real bottom line: the SNB ran out of time, the ECB will run out of time this week, and the Fed, Bank of Japan and the Bank of England ran out of time in 2014.
There seems to be a growing realization that central banks may indeed be part of the problem, rather than offering a solution in their incessant debasement of fiat currencies. 

EURCHF Wanders Lower.

EURCHF wanders lower. Technical levels being defined and used by traders.

Volatility from last week’s actions by the SNB has led to making a mess of the daily and hourly charts. This takes away some of the technical vision from the perspective of those time periods.   All is not lost, however. .That is what I look for, at least. Looking at the 5 minute chart above, the first thing I notice is the action shows that some of the spikes are becoming less volatile. This is suggesting a more normalcy in the pair.   Is it out of the woods? No but let’s say, the market is less risky now.  Traders can use technical levels to define and limit risk and there are some patterns from the technicals which suggest traders are paying attention and not just “winging it around” in a low liquidity environment.  

Yesterday – largely in the Asian session – there were a few spiky moves. The first one, saw a sharp move on the break of the 100 and 200 bar MA and equally quick rebound. The second break lower yesterday, saw a move below the 200 bar MA briefly, but then a rally up and reestablishment of the 100 bar MA as support. The action after those two breaks was less volatile but bullish as the price extended up to the last high from Friday’s trade. Activity slowed into the Asian session today.In trading today, the price could not get above the last highs from Friday and drifted below the 100 bar MA (blue line). Traders started to use the 100 bar MA as resistance.   The price did move below the 200 bar MA (green line) in early European trading, but could not keep the selling going. A move back above the 100 and 200 bar MA forced some shorts to cover. I would expect that. The market is still uncertain. The market still has some nervousness. Risk was defined by that level and buyers came in/sellers covered. When the price failed to extend above those levels and the price moved back below the 100 and 200 bar MAs again, the sellers returned. Traders are keeping risk levels tight.  They are looking for a momentum move but if it does not show, they get out with little risk (or sellers enter and short on the failed break). Technical levels – viewable to all – are seeing reactions from traders.When the price moved below the trend line, there was more downward confidence, with the 100 bar MA as the risk defining level. Sellers taking control.

Over the last few hours the price has wandered lower. The next level of support comes in at the 38.2% at the 1.0039. Below that 0.9984.  I would not be surprised to see patient buyers against the 1.0039 level.  The goal is to find good trade location, with limited risk.   My thought is that 1.0000 might be a new floor. So I expect buyers on dips. Having said that, the upside potential will be dependent on getting and staying above the 100 and 200 bar MA (1.0138 and 101.60 currently) and then the 1.0221 area.If you are inclined to trade the pair, be patient. Keep positions small and risk to 2% max on account.  Follow the clues from what we have seen the market react to (the 100 and 200 bar MA and the ceiling, pay attention to the 38.2% retracement).

Swiss Stocks Fall on Central Bank's Surprise

Stocks in Switzerland fall the most in 25 years, led by the nation’s exporters, unexpectedly ended its minimum exchange rate.The Swiss Market Index slid 8.7 percent at the close of trading in Zurich, after earlier losing as much as 14 percent. The Euro Stoxx 50 advanced 2.2 percent to 3,157.36. Italy’s FTSE MIB Index surged 2.4 percent, while Germany’s DAX Index jumped 2.2 percent to cross the 10,000-point mark. The Swiss franc rallied, briefly causing several indexes priced in euros to surge as Swiss companies reflected the jump.

The SNB’s decision comes just one week before European Central Bank policy makers meet to discuss introducing new stimulus, including quantitative easing, a move that may add to pressure on the franc against the euro.Swiss exporters slid as the franc jumped to a record against the euro and surged as much as 27 percent versus the dollar. Watchmakers Cie. Financiere Richemont (CFR) and Swatch Group AG, which get the majority of their revenue from outside the nation, plunged more than 15 percent. Holcim Ltd., the world’s biggest cement maker, dropped 11 percent.

Swiss banks and financial companies also retreated. UBS Group AG sank 12 percent, while Credit Suisse Group AG slumped 11 percent. Julius Bear Group Ltd. slid 11 percent. Before today’s decision by the SNB, analysts at JPMorgan Chase & Co. said in a note that UBS, Switzerland’s largest bank, would be among lenders benefiting from an appreciating dollar. Among stocks rising today, Total SA was among the biggest gainers on the Euro Stoxx 50, climbing 2.8 percent, as energy companies rebounded. Consumer companies also advanced, with Unilever rising 3.7 percent and Anheuser-Busch InBev NV increasing 3.1 percent.

Quite Start For Big week for the US expected

 The market has quite heavily priced in the adoption of quantitative easing from the ECB, which it has been rumoured to be preparing for this month’s meeting. However, with Syriza leading the polls which may cause issues around its membership of the currency block and therefore the ECBs willingness to buy its bonds, the central bank may be forced to rethink its plans and either exclude Greece or opt for some other form of stimulus, which I imagine the markets wouldn’t take to as well.UK is also becoming increasingly viewed by investors as one to steer clear of with a general election due later this year which is simply too close to call, a vote on EU membership in the pipeline if the Conservatives remain in power and the economy showing signs of broad based cooling following a strong 18-month run.

The only thing that’s supported the currency recently has been the fact that the Bank of England is likely to be one of the first major central banks to raise interest rates but even this now looks unlikely until next year.He construction PMI this morning providing further evidence of the cooling in the economy, falling to 57.6 from 59.4, much larger than the expected drop to 59. Third consecutive month that we’ve seen a decline in the number although we should take a couple of things into consideration with this. Firstly, a decline in construction activity in the winter months is not that uncommon. Secondly, 57.6 is still a very good reading and points to continued strong growth in the sector which should not be sniffed at.US session is looking a little quieter today but things will pick up as the week goes on. Between PMI readings tomorrow, FOMC minutes on Wednesday, jobless claims on Thursday and the jobs report on Friday, it’s not going to be a straightforward first week for investors although it should set things up nicely for the year.

A quiet start to the week for the US despite the return of many traders following the new year break as a lack of economic data or events leaves investors looking for direction elsewhere.Europe that’s guiding investors with snap Greek elections later this month potentially setting a precedent for elections in other austerity stricken countries this year, with the anti-austerity Syriza party currently leading in the polls. Greek exit won’t be as catastrophic as it would have been a few years ago, it’s certainly undesirable and should Syriza rise to power, the eurozone faces the tough task of doing what it can to keep Greece in the union while not incentivising other countries to vote in parties of similar mindset. For this reason, it’s going to be a massive year for the eurozone. ECB faces a tough choice when it meets in a couple of weeks in the first of its now 6-weekly meetings.

Turmoil Boosts Hedge Funds That Bet Against Russia

The hedge funds are making money from the trades at a time when many competitors are struggling to eke out a profit. This year’s more than 40 percent decline in oil prices has curbed global growth and hobbled Russia’s economy. Bill Gross, who ran the world’s largest bond fund at Pacific Investment Management Co. before joining Janus Capital Group Inc. in September, said an excess of leverage, or borrowed money, is making markets more volatile.A $3.3 billion fund at Gross’s former firm has been one of those hit. The Pimco Emerging Markets Bond Fund (PEBIX) held $803 million of Russian corporate and sovereign bonds at the end of September, equal to 21 percent of total assets, an amount that’s more than double that of the benchmark it tracks, according to data compiled by Bloomberg. The fund has lost 7.9 percent in the past month, trailing 95 percent of its peers.

In addition to betting against the ruble, has also been profiting from a decline in Russian stock indexes, said two people familiar with the trades, who asked not to be identified because the information is private. Russian equities are down 42 percent in the past month and a half, according to the dollar-denominated RTS Index. Earlier this month Brent crude will continue its collapse into next year as the Organization of Petroleum Exporting Countries stops balancing the global market. His firm’s bearish stance on oil in October helped his fund reverse losses in 2014 after Brent slumped during the month.

Oil futures continued their slide today after Russia, the world’s largest crude producer, said it would refrain from cutting supply to tackle the global surplus. West Texas Intermediate dropped 2.7 percent to $54.44 a barrel in New York. Brent crude for February settlement fell 1.7 percent to $59.02 a barrel in London.Naphtal’s Boston-based P/E Investments benefited indirectly from oil’s plunge as it bet on currencies with little exposure to commodities, according to two people familiar with the matter, who asked not to be identified because the information is private. The firm’s main fund, which relies on computer models to trade, rose 4 percent in November, helped by the U.S. dollar and by wagers against the Canadian and Australian dollar, the euro and the Swiss franc, according to one of the people.

Firm joins other quant funds in using computer programs to beat star managers this year, in part from the plunge in oil prices that some human traders dismissed. Hedge funds on average are trailing the Standard & Poor’s 500 Index for a sixth year. Hedge funds returned 1.7 percent this year through November, according to data compiled by Bloomberg, compared with a gain of 12 percent for the S&P 500.

GBP/USD approaches 17-month lows as U.K. PMI disappoints

Pound declined against the U.S. dollar on Friday, approaching 17-month lows after the release of disappointing U.K. manufacturing activity data and as expectations for a U.S. rate hike this year lent broad support to the greenback. GBP/USD hit 1.5495 during European morning trade, the pair's lowest since December 23; the pair subsequently consolidated at 1.5481, retreating 0.62%.Cable was likely to find support at 1.5484, the low from December 23 and a 16-month low and resistance at 1.5621, the high from December 31.

Markit said the U.K. manufacturing purchasing managers' index slipped to 52.5 this month from a reading of 53.5 in November. Analysts had expected the index to rise to 53.6 in December. A separate report showed that U.K. mortgage approvals rose by £59,030 in November, beating expectations for an increase of £58,530. October's figure was revised to a £59,510 gain from a previously estimated £59,430 rise.Meanwhile, the dollar remained broadly supported as a recent string of upbeat U.S. data sparked optimism over the strength of the country's economic recovery and added to expectations for the Federal Reserve to soon raise interest rates.Investors continued to focus on developments in Greece, where parliament was formally dissolved on Wednesday after Prime Minister Antonis Samaras failed earlier in the week to persuade lawmakers to back his candidate for head of state, casting the country's international bailout into doubt.

Sterling was also lower against the pound, with EUR/GBP rising 0.26% to 0.7785. In the euro zone, Markit said the bloc's manufacturing PMI fell to 50.6 in December from 50.8 in November. Analysts had expected the index to remain unchanged this month.Germany's manufacturing PMI remained unchanged at 51.2 this month, in line with expectations, while France's manufacturing PMI hit 47.5 in December, down from 47.9 the previous month and confounding expectations for an unchanged reading.

Oil ends on a low price as OPEC stands aside

Oil prices fell on Wednesday to a 5-1/2-year low and ended with their second-biggest annual decline ever.Brent and U.S. oil futures bounced off session lows. But prices still settled at their lowest since May 2009. U.S. data showed crude oil stockpiles fell more than expected, but inventories at the oil hub at Cushing, Oklahoma, grew, keeping prices depressed.Oil prices have collapsed this year as the Organization of the Petroleum Exporting Countries opted to maintain the same level of output despite a global glut caused by expanding U.S. shale output and diminished demand growth from China.

An analyst at Price Futures Group, said the mood was "sour" and trade choppy as dealers continued to hunt for a bottom, with volatility exacerbated by thin holiday volume.U.S. crude fell 85 cents to settle at $53.27 a barrel, down 45 percent from a year ago.Trading seesawed as traders balanced positions for the new year and digested a mixed report on U.S. crude stockpiles from the Energy Information Administration.U.S. crude closed with its second-largest annual decline on record. The biggest came in 2008, when prices collapsed in the wake of the financial crisis. The last round of OPEC output cuts eventually brought them off lows near $30 a barrel.

OPEC at a Nov. 27 meeting this year decided against cutting output. Despite its own forecasts of a growing surplus, the group opted to defend its market share against shale oil and other rival supply sources.Turmoil in Libya dented OPEC supply in December to a six-month low, a Reuters survey showed, although forecasts still point to a glut.The EIA reported a weekly drawdown U.S. crude inventory, along with small increases in demand for gasoline and heating oil and a rise in stocks for gasoline and distillate.