Gold Weekly Fundamental Analysis May 28 – June 1, 2012, Forecast

FXEmpire   |  May 26 2012 7:54 EDT

By FXEmpire.com

Introduction: Gold prices always rise when there is uncertainty in the global economy. In times of uncertainty, investors tend to run towards gold. Suppose, rumors are flying high about some event in the world and this is increasing the uncertainty in the financial markets.

• Gold reacts to uncertainty in the markets
• Gold reacts to the Federal Reserve and monetary policy
• A drop in major currencies can indicate a run into gold.
• Remember investors tend to take profit from gold so watch for trading opportunities when investors are taking profits, not moving out of the markets.

Weekly Analysis and Recommendations:

Gold closed down slightly on the week at 1572.25, negating last weeks bullish hammer in the candlestick charts. This is golds 2nd week below the previous long-term uptrend and thus the outlook remains bearish. Overnight strength in the dollar pushed gold lower,

As shown below gold ranged from a high of 1598.95 to low of 1533.25.

Gold remained low as investors spent the week supporting the USD and JPY as safe havens. With the USD reaching new recent highs, the value of gold was less attractive.

With risk aversion the tone of the markets, most commodities suffered all week.

As the weekends, commodities and equities were mostly up amid persisting euro zone debt woes. However, with the long weekend for the US, volume is expected to remain thin. The US markets will remain closed on Monday, 28 May on account of Memorial Day holiday. Spot gold was seen rising following an initial decline during the morning trades supported by firmer euro. Still, it was probably heading to end the week in loss after displaying a spectacular recovery in the previous week. Euro retreated from its two year low levels against the US dollar, yet worries over worsening financial health in the Euro zone and weak economic indicators from China cast dark shadows over the global economy.

Sentiment in trade was sanguine after Italian Prime Minister Mario Monti hinted that most EU leaders support sales of joint bonds for the Euro region. However, reports that Chinas leading banks may fall short of loan targets for first time in 7 years nudged the renewed mood. Looking into the evening session, there are no major data slated for release. It remains to be seen in the coming days how the situation transpires in Europe as exit of Greece seems almost looming at this point in time. The week has seen encouraging numbers from the U.S but the situation in Europe continue to weigh on investors. Next week could give a better indication of the U.S economic recuperation with the Nonfarm payrolls data scheduled for release. Also in line, next week is the U.S GDP figures, both heavyweight numbers could have a significant bearing on the commodity prices. The recent string of weak numbers from China is raising fresh concerns about the pliability of the Chinese economy amid softening global demand and in that regards, policy easing from China could be on cards in the coming days.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.

Historical

High: 1916.20

Low: 1321.10

Economic Highlights of the coming week that affect the AUD, JPY, NZD and USD

Click here a current Gold Chart.

Originally posted here