4/1/2013 - The Current Market Sentiment

[walid]

The gold has come under pressure following the minutes of the Fed’s last 12 December meeting which has ended to new timely unlimited buying of US treasuries by $45b monthly as the minutes have shown that there is tendency of cutting the QE stance by 2013.
The market has watched strong dollar buying higher treasuries yields and drop in the equities market but that can be an overreaction as the text which came out from that meeting was clear depending on the economic changes as it has said that there is no change by falling of the unemployment rate to 6.5% and rising of the inflation to 2.5% and that what should be tracked by the markets. So there can be an explanation from the fed in favor of that direction of stimulation as there is no fear of the inflation upside risks and as the unemployment rate stands still in need of getting back.
but in the fact, the last figure of US CPI of November has shown easing back to 1.8% yearly after consistent rising from 1.4% in July to 2% in October undermining the inflation rising fear putting pressure on the gold while the labor market is hard to have that substantial improvement soon with the current slow pace of expansion in the manufacturing and non-manufacturing sectors and also the struggling confidence in consuming.
As the recent data have shown hardly place of US ISM Manufacturing index in the expansion territory in December by 50.7 rising from 49.5 in November waiting for the ISM non-manufacturing figure today to get down by God’s will to 54.2 from 54.7 in November after falling of the consuming confidence has been obvious by falling of its index to 65.1 in December from 71.5 in November while the markets were waiting for 70.5.
XAUUSD was well-supported after averting of the fiscal cliff heading to 1700$ per ounce psychological level but it has come under pressure following these minutes trading below 1650$ per ounce but above its recent supporting level at 1635$ which could help it to rebound after reaching it in volatile un trusted market of reaching some sort of compromise can lower the severeness of the cliff and that what has been actually materialized but the worries are still standing by the talk about rising of the debt ceiling again above the current 16.7 trillions.
God willing, in the case of falling further, the gold can meet again supporting levels at 1635$, 1584$, 1548$ before 1523$ which could hold its falling from 1920$ but in the case of rising again, it can be faced by 1694$ which could protect 1700$ this week but crossing it can be met by other resisting levels at 1754$, 1802$ before 1827$ which can open the way for its highest recorded level at 1920 on the 6th of September 2010.
While the market will be waiting Inshallah to know more about the labor market today with the release of US labor report of December which is expected to show no major change with new 145k added jobs out of the farming sector from 146k in November and unemployment rate stands at 7.7% as it was in November too.