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TD Securities: Still A Lot Of Questions After Leaked Details Of ECB Plan

Wednesday January 21, 2015 12:35 PM

Markets continue to digest the news of leaked documents from the European Central Bank proposing a €50 billion per month bond-purchase program. Eric Green, head of U.S. rates and economic research at TD Securities, says that, despite the headlines, there are still a lot of details missing that will add to market volatility on Thursday. “Is the ECB buying €50 [billion] a month through 2016 beginning in March - implying a buying program north of EUR1 T - or is the buying program confined to 2015 - implying EUR500 - with the option to do more based on incoming data?” he says. “In the case of the former it would be more than expected and in the case of the latter possibly less than expected.” However, he adds that the theme is clear that central banks around the world are “taking more aggressive action to shore up wobbly growth and a ubiquitous decline in actual and implied inflation.”

By Neils Christensen of Kitco News; nchristensen@kitco.com

 

TD Securities: Gold Rally Fundamentally Strong, Investors To Buy Dips

Wednesday January 21, 2015 12:35 PM

Despite gold’s dip below $1,300 on Wednesday, TD Securities says investors may still be interested in the metal. “Because this rally has been fundamentally strong, we still think there will be sentiment to buy dips,” they say. “It was not surprising that after a $130 rally since Jan 2nd, that the leaked plans of the ECB’s planned QE for tomorrow, along with Bank of Canada’s surprise rate cut, gold and silver finally gave back some gains.” They note that gold buyers will be looking at the 200-day moving average, which sits at $1,253 an ounce. “We expect support in silver to come in around $17.50-17.80,” they add.

By Sarah Benali of Kitco News; sbenali@kitco.com

 

iiTrader: Gold & Silver Markets To Remain "Explosive"

Wednesday January 21, 2015 10:00 AM

Gold’s breach of a key resistance line on Wednesday helped boost silver prices higher, where spot is now trading at roughly $18.24 an ounce as of 9:51am EST. “Silver continues pressing higher and keeping in lockstep with its big brother, gold,” says Bill Baruch, iiTrader’s senior commodity broker. “With gold able to break through a ‘line in the sand’ resistance level as well look for these markets to remain explosive.” Looking ahead, Baruch says given Thursday’s European Central Bank meeting, the first resistance level for silver to watch is $18.60; if breached, $18.80 becomes his next level. Support for silver comes in at $17.25 an ounce, but a close below $16.58 would indicate a downtrend for the metal, he adds.

By Sarah Benali of Kitco News; sbenali@kitco.com

 

UBS: Broad-Based Support For Gold As Prices Rise To $1,300

Wednesday January 21, 2015 8:40 AM

Gold’s ascent to the $1,300 area shows there is broad-based support in the marketplace, with a good mix of buying in exchange-traded products and increased speculative interest - both from institutional investors and corporations, UBS analysts say. They note that SPRD Gold Shares (NYSE: GLD) has seen good inflows since the start of the year. “These flows are consistent with safe haven demand as investors in the U.S. worry about the recent disappointing wage gains, retail sales and soft core inflation,” they say. “This also suggests that market participants are increasingly fading a mid-year start to the Fed's rate hike cycle.”

By Neils Christensen of Kitco News; nchristensen@kitco.com

 

iiTrader: Market Turmoil Keeps Gold In Immediate Uptrend

Wednesday January 21, 2015 8:29 AM

Momentum in the gold market pushed prices above the key psychological level of $1,300 an ounce. Wednesday morning, February gold prices hit a session high of $1,307 an ounce, its highest level in five months. Not only is gold benefiting from continued financial turmoil after the Swiss National Bank surprised markets by removing its currency peg against the euro almost a week ago, but is supported by weaker growth expectations, says Bill Baruch, senior commodity broker at iiTrader. He adds that markets are now speculating that the Federal Reserve will delay its first rate hike. The next level gold bulls should watch is resistance at $1,316.40 to $1,321.40 an ounce. He adds that gold will remain in a uptrend until it closes back below support at $1,277 an ounce.

By Neils Christensen of Kitco News; nchristensen@kitco.com

 

HSBC: Gold May Be In Need Of Price Consolidation

Wednesday January 21, 2015 8:29 AM

While HSBC does not discount further gains for gold, the metal may be in need of a price consolidation, HSBC said on Tuesday. “The yellow metal may be in need of a price consolidation given its 9% gain in less than three weeks of trading so far this year,” they said in a research note. “Price rallies of such nature may put a strain, if not discourage, price sensitive emerging market buyers, we believe.” HSBC also commented on the unusual correlation between gold and the euro right now and said it just may be attributable to gold’s safe have appeal. “Gold is historically positively correlated to the EUR, given that the two are most frequently quoted in USD terms,” HSBC said. “However, bullion’s recent divergence from moving in tandem with the EUR to the opposite of the EUR is attributed to its appeal as a perceived safe haven asset, in our view."

By Sarah Benali of Kitco News; sbenali@kitco.com

 

CIBC: Gold:Silver Ratio Should Be Narrowing

Wednesday January 21, 2015 8:29 AM

Silvers prices have more room to run higher, according to analysts from CIBC Capital Markets, but they are not ready to change their forecast just yet. CIBC says that they are disappointed that the gold:silver ratio has not narrowed further. They note that the ratio tends to expand when gold is going down and contracts when gold is on a rising trajectory. “Though the gold/silver ratio has come down a little from a high of 75x to the current 72x, silver remains trading as if gold will likely contract again,” they say. “Given the view that the rally is not quite done yet and backed by a gold trading model that is not yet delivering a sell signal, we prefer to stick with the current trend for a while longer even though we are not increasing our silver price forecast of $17/oz. at this time.”

By Neils Christensen of Kitco News; nchristensen@kitco.com

 

 

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