Week in FX Americas – Price Action Not For Fools Gold

Gold price action will probably end up being the lead financial story for 2013. This year will close out and end up being the first losing year in thirteen. The price move since US lawmakers struck a deal has not been for the faint of heart, especially those who have been whipped caught short. Commodity participants were caught off-guard by the +$50 dollar rally yesterday that has lost steam again in early $1,320’s. The rally seems counterintuitive to the temporary response deal struck mid-week in Washington or is it?

What’s the requirement for safe haven buying of the yellow metal? Investors are disappointed with the short-term solution. Washington’s deal is again “kicking the can further down the road.” Just like against all major currency pairs, even the Yen, the dollars weakness is the dominating variable that has pushed gold higher. Not helping matters is the ambiguous policy environment. Investors are going to be extra cautious because of the new extended deadline agenda. Nothing has been resolved on the fiscal front and because of this, Fed policy expectations are going to change – taper timing is being pushed further out.

The market was expected to be long, mind you, the lack of Commitment of trader’s report and definitely the price action, would suggest that the market had mostly experienced a short squeeze. Since the initial move there has been very little relief pullback. The weekly bear trend is expected to end today only if the yellow metal can close out the week trading above $1,310.


WEEK AHEAD

* USD Unemployment Rate
* USD Change in Non-farm Payrolls
* AUD Consumer Prices Index
* GBP Bank of England Minutes
* CAD Bank of Canada Rate Decision
* JPY National Consumer Price Index
* GBP Gross Domestic Product
* USD Durable Goods Orders

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Dean Popplewell

Dean Popplewell

Vice-President of Currency Analysis and Research at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell