Forex Magnum


Gold in the shadow of the EcoFin Summit

Autore: FX Empire Analyst - Barry Norman

Gold in the shadow of the EcoFin Summit

Gold in the shadow of the EcoFin Summit

The Asian equities have paired in losses and are trading up by 0.3 to 1.2 percent after losing in the first two days of the week. The pressure comes from both surging Spanish and Italian debt yields and heating expectations that the coming EU Summit may not deliver any break through. Risk aversion remains very strong as the cost of default insurance for Spain’s largest banks and companies increased to historically record highs weakening the shared currency Euro.

German and Italian prime ministers made negative comments on Europe’s proposed Eurobonds, causing the credit ratings agency Egan-Jones to lower Germany’s credit rating and may further support downside for currencies and commodities in today’s session.

Market sentiment may remain depressed, as investors might be worried ahead of the forthcoming EU summit. It is quite unlikely to yield any substantive results with regard to the European debt crisis due to lack of support and unity and may further pressurize base metals.

Italy is scheduled to auction 6-years note and any increase in the borrowing cost may further support downfall of metals pack.

From the economic data front, the German import prices and consumer price index may decline due to weak imports and lack of demand while the MBA mortgage applications from US may also remain weak due to increased house prices and lower demand for new homes. However, the durable goods and pending home releases may increase and support slight gains in the evening session.

Gold futures have changed a little at the early electronic trading. Asian equities are swinging between gains and losses after Egan-Jones added concern for the Euro crisis by downgrading German bond rating from “AA-“ to “A+” and indicating a significant uncollectable receivables from the Euro zone. Gold is expected to continue to trend downwards at a slow pace.

Spanish bond yield rose once again on speculation of the country’s junk status while the Germany may remain under pressure to abstain from any ESM loan to Spain as Germany’s private bond holders would be adversely affected. The Euro therefore seems to remain under substantial threat and especially after the above said concerns erased hope of any fruitful outcome from the Euro summit on Jun-28-29. Gold is therefore also likely to remain under pressure for the day. Despite the US manufacturing releases came awful, gold could not fly. It clears that the metal is now more concentrated towards the European issues.

Impact of major US economic releases even got less importance in front of the deepening European crisis. So, any threat to the Euro is likely to be fatal for gold as well.  As discussed above, cynicism of European summit and Merkel’s bold statement of not sharing total European debt till she breathe,  may really be proved as destructive for the shared currency along with gold. Amid this, Italy will be selling six months bills today and would face more challenge in 5 and 10 years bond auction. US economic releases today may show a slight improvement on pending home sales while durable goods orders may rise. All these would be supportive for dollar.

The Egan-Jones downgrade of Germany is likely to play a key role, as investors will begin to look at the exposure of German banks to the debt of the surrounding nations. Rumors are flying that an Italian bank is seeking a rescue from the government, which is just how things got rolling in Spain just a few weeks ago.


Sei un Analista Tecnico Indipendente Professionista del mercato FOREX? Registrati anche tu nella comunità ed elabora insieme a noi strategie automatiche di successo! Dettagli


Sai programmare in MQL o usare il MetaTrading? Registrati e contribuisci alla programmazione di trading system, script e indicatori per MetaTrader. Dettagli


Ti piace il Trading? Vieni in Trading Room a Cosenza, guarda le analisi tecniche real time dei nostri indicatori e decidi quando entrare nel mercato. Corsi base ed avanzati. Dettagli

Non esistono ancora Commenti per questa news.

Archivio News