Market Overview

Gold Falls Again Recently, $1340 Next?

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The Federal Reserve Bank of Philadelphia’s general economic index fell to minus 5.2 in May from 1.3 the prior month, and jobless claims jumped by 32,000 to 360,000 in the week ended May 11, exceeding all forecasts in a Bloomberg survey of economists. Further, an important inflation gauge showed the cost of living in the U.S. fell in April for a second month.

Equities:  Once again, even in the face of lackluster economic data today, the US equity market are marching higher, with the JUN13 emini SP futures trading up 3 pts from yesterday’s close.  This morning, this market is trading at 1657. It looks like some resistance could show up at 1665. If the markets got up to 1665, we could see a pullback from there. This market is obviously very strong though. This is a classic sign of a bull market: shrugging off bad news to rally higher.

Bonds: Mainly due to the lackluster economic data this morning, especially combined with the inflation data, the US bonds have reversed course from a recent downtrend. The US JUN13 30yr bond is trading up over 1 point today to 145’08. With this data this morning not inciting more bond selling, we would not be surprised to see the bonds range from 143-147 before the next key jobs/unemployment report comes out in a few weeks in April. If this jobs # comes out strong once again and the unemployment # ticks downwards again, this could likely give the bond market a reason to go down again and bring yields higher.

Currencies: The US dollar is having a slight retracement against the Pound, Euro, and Yen, but is still strong versus the Aussie Dollar. The Yen is currently above our key pivot of 97.60, thus above here we believe the Yen will have a short covering rally. The Aussie dollar looks weak to us, as it is not rallying with other FX peers. This currency could head lower.

Commodities:  Natural gas fell 3% after a report from the U.S. Energy Information Administration showed natural gas supplies rose more-than-expected last week. Corn futures (JUL13) are down over 1 percent today as well. We focus more on gold futures. The gold market has had a lot of trouble staying below a key resistance area of $1475-$1480. A key level below the current price is $1340. Gold is down around $8 this morning, trading at $1388. We don’t necessarily believe gold is going to $1340 tomorrow, but would not be surprised to see gold gradually approach that key level.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. TRADING COMMODITY FUTURES AND OPTIONS IS SPECULATIVE, INVOLVES RISK OF LOSS, AND IS NOT SUITABLE FOR ALL INVESTORS.

Gold Futures Chart

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Commodities Markets Trading Ideas

 

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