InvestMacro Forex News

By HY Markets Forex Blog

The Japanese economy which is currently the third largest in the world expanded faster than expected within a year with the increase in exports .The Japanese economy grew at a estimated rate of 1% at the end of 2012 and the gross domestic products increased by 0.9% within the last 3 months from January to March from previous quarter.

According  to reports ,ever since Abe’s return to power the economy has boosted in the first full quarter and he plans to continue to revive the world’s third largest economy .Analysts are expecting the export income and domestic demand to pick up to help  the economy from  its two decades of the struggle with deflation and stagnation .

Exports have helped to boost the yen to 4-1/2 year against the dollar, making 0.4 % contribution to GDP despite the high number in imports which causes a weaker currency. The main Nikkei 225 index climbed by 45% this year.

Japan is currently outpacing the US and the eurozone with a growth rate of 3.5% from January to March quarter.

“ Some Japanese stocks may be too high the GDP shows the strength of economy may justify the uptick trend in stocks .I see a chance that Japan will have even better growth this quarter, “  said the senior economist Yoshiki Shinke at the “Dai-Ichi Life Research Institute in Tokyo.

The post Japanese economy boosts in first quarter appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

Despite the weak economic reports, the US stock market keeps increasing which seems like a reoccurring theme. Despite the fact the slow economic growth, investors still think about how the Federal Reserve pumps   money into the financial market.

Chief equity strategist, Terry Sandyen said “What’s more, most investors have come to expect choppy economic growth, so they take mildly disappointing reports in stride; it’s a good backdrop for the market to trend higher.” The standard & poor’s 500 index increased by 7 points to 1,656 which is an estimated 0.4%. While the Dow Jones industrial average boasted to up to 42 points to 15,257 of 0.3 %.

The U.S factories are said to cut back sharply on production in April including automakers and other industries according to the Federal Reserve. Manufacturing outputs dropped to 0.4 % in April marking the biggest and third drop in four months since October.

A number of nine industries in the S&P 500 edged higher, energy stocks were an exception as falling oil prices were a part of the lower group.

The price of crude oil fell 20 cents to $94 a barrel. Crude oil prices dropped 20 cents to $94 a barrel.  Macy’s increased by 3%, $1.34 to $48.73 .Macy’s department store increased in its quarterly divided by a nickel to 25 cents as they plan to buy an additional $1.5 billion of its own stock.

The post Stock market rises despite weak growth in the economy appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By MoneyMorning.com.au

I have devoted a lot of time recently pointing out that I thought the Australian dollar was about to fall.

Unlike the mainstream media that waits until something has fallen before writing articles about it, I warned on the 25th of April, when the Australian dollar was trading at US$1.03, that:

‘The next stop for the Aussie is of course the last major line of support around US$1.015-1.02. I would expect to see some buying around that level but I don’t think it will be enough to turn things around. If that last line of support gives way then you could expect to see the Aussie heading towards parity in short order.

‘From there the Aussie would be testing parity as well as the lower edge of the symmetrical triangle. If that can’t hold the Australian dollar would run out of friends pretty fast.

Fast forward three weeks and the Aussie is indeed running out of friends fast. Last week I said that:

‘I think we will see the US$1.015 level give way within the next week or so… From where I sit there is a set of dominoes piled up from here to around US$0.98 and it could happen quicker than most expect once it gets going.‘

In the event the Australian dollar broke beneath the US$1.015 level on that very day and we have seen the sharp sell-off that I was predicting unfold over the past week…

In the very short term the currency is starting to look a little overstretched on the downside. We can expect to see some sort of bounce from this region, but it’s by no means certain.

As I said last week (you can find last week’s offering here) the very long term charts are starting to look pretty bearish. The major line in the sand for our currency is the 2008 high of US0.985.

In the short term I would expect to see that level hold, or if it doesn’t hold the currency won’t spend too long beneath it before having a short squeeze higher.

The US$1.015 level should prove to be stiff resistance on the way back up and I don’t think the Aussie dollar will manage to bust back above that level from here.

Looking at the longer term picture I remain of the view that the US$0.985 level will ultimately fail and we’ll see the Aussie dollar plummet to the low 90′s and perhaps even lower.

Murray Dawes
Editor, Slipstream Trader

Join me on Google Plus

Ed Note: It’s one of the biggest dilemmas for any investor – when should you sell your shares? In today’s Money Morning Premium, Kris discusses two methods that investors can use to protect their shares from a falling market, without selling them. Click here to upgrade now.

From the Port Phillip Publishing Library

Special Report: IT’S A TRAP

Daily Reckoning: Survival of the Most Capital Efficient

Money Morning: STOP PRESS…Resource Stocks Pay Dividends Too

Pursuit of Happiness: What Drives Entrepreneur’s and Inventors

By MoneyMorning.com.au

I have devoted a lot of time recently pointing out that I thought the Australian dollar was about to fall.

Unlike the mainstream media that waits until something has fallen before writing articles about it, I warned on the 25th of April, when the Australian dollar was trading at US$1.03, that:

‘The next stop for the Aussie is of course the last major line of support around US$1.015-1.02. I would expect to see some buying around that level but I don’t think it will be enough to turn things around. If that last line of support gives way then you could expect to see the Aussie heading towards parity in short order.

‘From there the Aussie would be testing parity as well as the lower edge of the symmetrical triangle. If that can’t hold the Australian dollar would run out of friends pretty fast.

Fast forward three weeks and the Aussie is indeed running out of friends fast. Last week I said that:

‘I think we will see the US$1.015 level give way within the next week or so… From where I sit there is a set of dominoes piled up from here to around US$0.98 and it could happen quicker than most expect once it gets going.‘

In the event the Australian dollar broke beneath the US$1.015 level on that very day and we have seen the sharp sell-off that I was predicting unfold over the past week…

In the very short term the currency is starting to look a little overstretched on the downside. We can expect to see some sort of bounce from this region, but it’s by no means certain.

As I said last week (you can find last week’s offering here) the very long term charts are starting to look pretty bearish. The major line in the sand for our currency is the 2008 high of US0.985.

In the short term I would expect to see that level hold, or if it doesn’t hold the currency won’t spend too long beneath it before having a short squeeze higher.

The US$1.015 level should prove to be stiff resistance on the way back up and I don’t think the Aussie dollar will manage to bust back above that level from here.

Looking at the longer term picture I remain of the view that the US$0.985 level will ultimately fail and we’ll see the Aussie dollar plummet to the low 90′s and perhaps even lower.

Japanese Bonds Continue to Sell Off

The continuing collapse in the Japanese Yen and rapid increase in Japanese bond yields is the most interesting development in the markets over the past few months.

From a low yield of around 35bps, after the Kuroda bombshell announcement that they were going to print their way back to prosperity, the JGB’s have sold off sharply to a yield of over 90bps.

The bond market was shut down twice this week due to circuit breakers based on volatility. It escaped being shut down a third time by 1 basis point.

In other words the market is no longer orderly. Investors are trying to get out in droves and there is a chance we could see the volatility increase even further from here.

I wonder how comfortable the government will be once yields start shooting above 1%? To put things in perspective, every 1% rise in bond yields takes another 25% of government revenue. There has to be a few nervous nellies eyeing the bond market and praying that the sell-off is contained.

Now that the US dollar has busted up through the psychologically important 100 level against the Yen there is very little stopping the ongoing collapse in the Yen. I believe you’ll see the US/Yen heading above 105 and towards 110 before long.

The Aussie/Yen has been highly correlated to our stock market due to the prevalence of the carry trade. It’s still very early days but the weakness in the Australian dollar is seeing the Aussie Yen tread water even though the Yen is weak against the US dollar.

Australian Dollar/Yen Daily Chart vs ASX 200

Click to enlarge

I’ll need to see the Aussie/Yen heading down before I will be more confident in calling our stock market lower. Yesterday’s negative price action in Australian stocks was initiated by a large sell order from a leveraged hedge fund. We could see more selling like this in coming days.

So how will this all play out for stocks?

Looking at the technical picture for our stock market I can see we’re now at a true inflection point. Either our stock market is going to break away from the distribution it has been in for the past four years, or it isn’t. It’s decision time. I think we’re still under the influence of the long term distribution and will fall back inside it before long.

ASX 200 Weekly Chart

Click to enlarge

You can see from the above chart that the Australian stock market has traded in a pretty tight range for years. The gravity of the point of control at 4,700 is very strong and I would expect to see us revisiting that level at some point.

The first thing I need to see is a close under the 15th March high of 5,163. From there we should see a retest of 5,025-5,040. If the market can’t hold above that level then we’ll be re-entering the major long term range and we could expect to see a pretty quick trip to 4,700.

If we break out above the highs from yesterday and close above that 5,250 level then all bets are off and we could witness a big rally as we break away from the multi-year range.

I think that outcome is a low probability, but as we have learnt over the past year, anything can happen in these crazy money printing times.

Murray Dawes
Editor, Slipstream Trader

Join me on Google Plus

Ed Note: It’s one of the biggest dilemmas for any investor – when should you sell your shares? In today’s Money Morning Premium, Kris discusses two methods that investors can use to protect their shares from a falling market, without selling them. Click here to upgrade now.

From the Port Phillip Publishing Library

Special Report: IT’S A TRAP

Daily Reckoning: Survival of the Most Capital Efficient

Money Morning: STOP PRESS…Resource Stocks Pay Dividends Too

Pursuit of Happiness: What Drives Entrepreneur’s and Inventors

By MoneyMorning.com.au

Looking back at the articles I’ve written about silver over the years, if there’s one theme that keeps recurring, it’s the word: ‘frustrating’.

Silver can meander about and do nothing for years. Then, when your back’s turned, it’ll suddenly spike to unheard-of levels, making its owners rich.

Then, just as suddenly, it’ll plummet, leaving all those who hold the metal heading for the poor house.

Yet, for all its volatility, for all the dark rumours of shortages and manipulation, it trades in a remarkably symmetrical pattern.

For a few brief hours in the spring 2011, it cost $50 an ounce. Now it’s less than half that price, at $23.

So is it time to be playing the silver game once again?

Silver Promises Something for Everyone

Silver’s unique selling point is that it’s both a monetary and an industrial metal.

If you get terribly excited by the progress human beings are making in the world of electronics, you might want to invest in silver. Its high conductivity means it finds all sorts of increasing usage in computers, mobile phones and screens.

Or perhaps you’re excited by the possibilities in the worlds of nanotechnology, green technology, and even medicine.

Well, silver is finding more and more use there too – the path from solar technology to water purification is lined with silver. Then there are the ball bearings, the batteries, the soldering and brazing – silver remains a key industrial metal.

Perhaps you think that soaring stock markets are telling us that the world’s economic woes are now behind us. Greater prosperity leads to greater buying of jewellery, which means greater buying of silver.

Or perhaps you’re more of the mind that systemic debasement of money is going to lead to some kind of currency crisis. In that case you want to be investing in tangible, monetary metals. Cue silver.

You might look at the fact that annual global silver production currently stands at around 24,000 tonnes, but demand stands some 33% higher, at 32,000 tonnes. (The shortfall is met by recycling, scrap sales, stockpiles and central bank sales).

Then you might look at the cumulative effect of this shortfall, as depicted below by Nick Laird (sharelynx.com), and once again you’ve got that itch to buy silver.

Global Silver Production

Cumulative production less cumulative demand = cumulative deficit

Or you might look at the fact that silver derivative trading can mean that paper representing as much as 100 times physical production can be traded on the futures exchanges in any given period.

It’s not hard to conclude that some sort of short squeeze is inevitable, as it would be impossible to deliver all the silver that is actually sold.

You might even consider the fact that there is about 16 times as much silver in the earth’s crust as there is gold. So arguably the silver price is should be 1/16th the gold price: that’s $90 an ounce on current gold prices.

There’s something for everyone with silver. Quick. Buy, buy, buy.

The Biggest Problem With Silver

Of all the investment stories out there silver must be the easiest sell. The problem, however, is a failure to deliver on its potential.

Like I say, the problem with silver is that it is frustrating. In fact, that it frustrates is its single, greatest consistency.

$50 was the high it made in 1980. That price was an aberration, but even so, with all the inflation that’s gone on since, it’s amazing to think that a metal can be trading at less than half its high of 33 years ago.

Copper, for example, even with its current woes, sits at more than double its 1970s blow-off top.

Silver can rise like a rocket and fall like a stone. But if you trade the metal with your eyes wide open, aware of its potential, but also aware of its record, there’s money to be made. There are no hard and fast rules. But the chart is symmetrical.

The chart below shows a monthly price chart of silver since 2001.

Click to enlarge

I’ve drawn some dotted lines at key levels. It’s worth having these levels in mind at all times with silver. For all the meandering, the frustration, the rocket launches and the capitulations, these levels are a magnet for silver. It just keeps coming back to them.

You can see there are certain pivot points – lines of resistance and support. $8 was resistance from 2004 to 2005; it became support in the 2008 collapse. $15 was resistance from 2006 to 2008, but in 2010 it became support. $26 was support in 2011 and 2012 – now it’s resistance, as is, higher up, $36.

And of course there’s the great target in the sky, $50.

Watch the $22 an Ounce Mark Closely

At present, on the monthly chart, silver is in free-fall, but it’s sitting just above support at $22. I am watching closely to see if it holds that number.

The bounce after its recent collapse has been all but non-existent, which does not bode well. The reality is this is a market that is trending down. I’m in no rush to buy more just yet.

That said, given that silver is trading so close to that key level just now, there’s a case to buy at just above $22 with a stop-loss just below. If $22 breaks, the next line is $19, and after that $15. Similarly, if it rallies to $26, there’s a strong case to short, with a stop just above the $26 mark.

Just remember that a trader needs to be flexible. Accept that the market knows better than you. For all the arguments to buy silver, you can’t argue with the price.

But since I am writing a column, I’ll make a prediction and be willing to be proved wrong. Silver will re-test its recent lows of $22, then rally to $26-$27, before falling to $15. And from there it will rise to $50.

Dominic Frisby
Contributing Editor, Money Morning

Publisher’s Note: This article originally appeared in MoneyWeek

Join Money Morning on Google+

From the Archives…

Why Small-Cap Resource Stocks Beat Blue Chips Hands Down
10-05-2013 – Dr Alex Cowie

Can Australian Stocks Defy Gravity if The Australian Dollar Falls?
9-05-2013 – Murray Dawes

Build Wealth Fast through the Resource Sector
8-05-2013 – Dr Alex Cowie

36% Potential Upside for Australian Stocks Over the Next Two Years
7-05-2013 – Kris Sayce

The Key to Becoming a Successful Investor
6-05-2013 – Kris Sayce

By MoneyMorning.com.au

What do you think has been named the ‘sexiest job of the 21st century’? International footballer? Supermodel? Brain surgeon?

All wrong. The answer is in fact ‘big data scientist‘. This does not mean a data scientist who happens to be six foot six and 20 stone. It refers to those who can make sense of the vast and constantly expanding heap of digital data. The amount of data that is gathered is astonishing.

According to IBM, we create 2.5 quintillion bytes of data every day. This means that 90% of the data in the world today has been created in the last two years alone.

Where does it all come from? The constant use of the internet generates data all the time. Every time you use your mobile phone, you create data. But human interaction is not the only cause. There is the ‘internet of things’.

Two million security cameras in the UK record images that are faithfully filed away. Sensors also give out stores of data, such as climate information and detecting possible faults on aeroplanes and cars. At home we could even have sensors which tell us when to turn on the radiator or even restock the fridge.

Who is Using All This Data?

Two of the biggest users of data are financial trading firms and medical researchers. Many hedge funds rely upon high powered computers to spot tiny price anomalies. By acting instantly, they can take advantage of these discrepancies to turn a profit.

Proximity to a data centre is famously important. Even the few milliseconds that it takes for data to pass down a cable can mean the difference between profit and loss.

Medical research similarly depends upon data like never before. Dramatic improvements in sequencing machines have made it possible to read DNA rapidly and cheaply. All over the world researchers are searching through vast quantities of DNA to look for links to diseases.

But it is in the cut-throat world of business that data mining is seen as critical to success. Every time you go the supermarket and use your loyalty card, you reveal a little more about yourself. You will have noticed that the offers you receive become increasingly relevant and attractive.
Online we reveal even more. When we checkout at the supermarket we reveal only what we have bought. But when online, we reveal everything we have looked at.

There is something undeniably sinister about this. Google and other internet giants are often accused of knowing too much about us and using the information for nefarious purposes. Of much greater concern are the intentions of the government.

Governments use data monitoring in the fight against crime and terrorism. CCTV cameras have probably done more to reduce crime than anything, and many a terrorist plot has been foiled by the listening ear of the intelligence services. But the boundary between this legitimate activity and infringement of privacy is a fine line.

The New Rock Stars of the Tech World

Data can be used to profile customers and sell them things. Data can be used for useful medical research and ‘socially useless’ financial trading. But it can only be used if we make some sense of it all.

‘Big data‘ refers not to data routinely and legitimately collected, but also to all unstructured ‘dark data’. This can include email archives, warranty forms, call centre recordings and doctors’ notes, all of which could contain nuggets of useful information.

To find it, the big data scientists use algorithms, which are ‘effective methods for solving a problem expressed as a finite sequence of steps.‘These formulas now have real value. Netflix paid $1m for an algorithm that more accurately predicts which films a customer would like.

The masters of the algorithms are now the rock stars of the tech world. ‘The rise in the importance of algorithms,’ says computer science professor Dr András Faragó, ‘parallels the earlier ascendance of software itself, which once played a secondary role to the original star, hardware.‘

According to Gartner, 42% of big businesses have adopted big data technologies and by 2016 30% will be wielding their information assets also as a currency – bartering or trading with them, or even outright selling them.

The Best Bet for Investors

Clearly there is value in the interpretation of data, but for investors the best bet is data storage. Value or no value, the data must be stored somewhere and according to the International Data Corporation, ‘storage is increasing at a compound annual growth rate of 53%… revenue from storage consumed by Big Data & Analytics environments will increase from $379.9m in 2011 to nearly $6bn in 2016.‘

Tom Bulford
Contributing Editor, Money Morning

Join Money Morning on Google+

Publisher’s Note: This article originally appeared in MoneyWeek

From the Archives…

Why Small-Cap Resource Stocks Beat Blue Chips Hands Down
10-05-2013 – Dr Alex Cowie

Can Australian Stocks Defy Gravity if The Australian Dollar Falls?
9-05-2013 – Murray Dawes

Build Wealth Fast through the Resource Sector
8-05-2013 – Dr Alex Cowie

36% Potential Upside for Australian Stocks Over the Next Two Years
7-05-2013 – Kris Sayce

The Key to Becoming a Successful Investor
6-05-2013 – Kris Sayce

By www.CentralBankNews.info

By www.CentralBankNews.info     Russia’s central bank held its policy rate steady but again trimmed some of its long-term rates and said there was a risk of further economic slowdown while inflation was expected to hit the bank’s target in the second half of this year.
    The Bank of Russia, which raised its key refinancing rate by 25 basis points in September 2012 to the current 8.25 percent, cut the rates on some of its standing facilities by 25 basis points, as in April, to align the cost of obtaining liquidity from the central bank with its main operations,  strengthening the transmission mechanism of monetary policy.
    Russia’s headline inflation rate rose to 7.2 percent in April, up from 7.0 percent in March,  well above the central bank’s target range of 5-6 percent. The central bank warned that if inflation remains above its target for a prolonged period, it would affect people’s expectations and “thus pose inflation risks, in particular taking into account the planned increases in the natural monopolies’ tariffs.”
    “However, according to the Bank of Russia projections based on the assumptions of maintaining the current monetary policy stance and absence of adverse food price shocks, the rate of inflation will return to the target range in the second half of 2013,” the bank said.

    Growth in the first quarter is also continuing to decelerate, the bank said, with industrial output not rising from the first quarter of last year, weak investment activity and economic confidence gradually deteriorating.
    “There remain risks of further economic slowdown, stemming among other factors from the sluggish global recovery,” the bank said, adding that the labour and credit markets would still support demand.
    “The Bank of Russia will continue to monitor inflation risks and the risk of the economy slowing down,” it said.
    The central bank has been under pressure for months to cut rates to stimulate growth but last month Russian President Vladimir Putin defended the bank’s policy on television saying its stance was “largely justified because it’s aimed at subduing inflation” which is in the interest of citizens and the economy.

    www.CentralBankNews.info

By www.CentralBankNews.info     Iceland’s central bank held its benchmark seven-day lending rate steady at 6.0 percent, saying “inflation is expected to reach the inflation target earlier than previously expected, with weaker output growth and a stronger krona offsetting larger wage increases and weaker productivity growth.”
    However, the Central Bank of Iceland said uncertainty about the krona’s exchange rate could contribute to more persistent inflation expectations so it will be taking a more active role in the foreign exchange market to reduce fluctuations in the krona from its recent levels.
    “Foreign exchange mismatches in financial institutions’ balance sheets have been reduced recently, and the exchange rate of the krona has been close to a level that, other things being equal, could be considered sufficient to bring inflation back to target in the near term,” the central bank said.
    In its latest monthly bulletin, the central bank reduced its growth forecast for this year and the following years from its previous forecast from February due to lower-than-expected investment.
    The central bank, which has held rates steady this year after raising them by 125 basis points in 2012,   said inflation was now closer to the bank’s 2.5 percent target since 2011 and a more active role in the foreign exchange market should “facilitate speedier adjustment of the domestic price level to a stronger krona and to reduce inflation expectations.”

    “In that case, the inflation target could conceivably be reached earlier than forecast, although this depends on other factors as well,” the central bank said.
     This year the Icelandic krona has appreciated over 10 percent against the dollar, partly in response to central bank intervention that helped dent expectations of continued depreciation. In early May, the krona hit a high of around 116 to the U.S. dollar. Since then it has dropped almost 6 percent and was quoted at 122.8 to the dollar earlier today.

    Prior to the global financial crises, the krona was roughly twice as strong,  trading around 60 to the dollar. Early in the crises, Iceland’s three largest banks collapsed in 2008 and currency controls were imposed to protect the krona after it plunged in mid-2008.

    The drop in the krona pushed up inflation to almost 20 percent in early 2009 but it gradually eased before accelerating in late 2011 to almost 7 percent and the central bank responded by raising interest rates.  Since January 2012 inflation has been steadily declining and hit 3.3 percent in April from 3.9 percent in March, but he central bank cautioned that inflation expectations had recently risen.
    The central bank expects inflation to hit its target in the first half of 2014, slightly earlier than previously forecast due to a stronger krona.

    But before currency and capital controls are lifted, the central bank said it would have to review its intervention policy, along with the state of fiscal policy and consider whether wage settlements are consistent with the inflation target.
    “Before decisive steps are taken to lift controls on capital outflows, it will be necessary to re-evaluate this policy,” the bank said, adding this would also apply to any changes in the monetary policy framework.
    The central bank, which considers its current policy stance accommodative, said the margin of spare capacity in the economy continues to narrow despite a slowdown in the pace of economic recovery.
    “It is still the case that as spare capacity disappears from the economy, it is necessary that slack in monetary policy should disappear as well,” the bank said, adding the speed of a normalisation of its policy hinges on inflation, wages, the exchange rate, fiscal policy and factor that affect demand.
     In line with weaker global growth, the central bank said output has slowed and terms of trade had deteriorated and in “2013 and throughout the forecast horizon, the outlook is for output growth to be somewhat weaker than the Bank projected in February.”
    Iceland’s economy has recovered strongly following the global financial crises and growth of 1.6 percent in 2012 of was among the strongest in developed countries.
    In its latest monetary bulletin that was released today, the central bank said first quarter 2013 Gross Domestic Product growth is estimated at 0.3 percent quarter-on-quarter and 1.5 percent year-on-year, but then the pace is expected to ease in the second half of the year.
    For 2013 the growth forecast is trimmed to 1.8 percent, down from the February forecast of 2.1 percent, due to much weaker investment than expected.
    The outlook for growth in 2014 and 2015 has also been revised downward from February. Growth next year is now forecast at 3.0 percent, down from 3.7 percent, and 2015 growth is now forecast at 3.5 percent from a previous 3.9 percent, due to slower growth in domestic demand.

    www.CentralBankNews.info
       

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 15 May 2013, 08:15 EDT

WHOLESALE gold bullion prices fell to three week lows around $1410 an ounce Wednesday, as European stock markets ticked higher, reversing earlier losses following disappointing Eurozone growth data.

Gold in Euros fell as low as €1094 an ounce, while gold in Sterling fell below £930 an ounce.

“Gold spot is approaching the support [level] of $1403 [an ounce],” say technical analysts at Societe Generale.

“There is no significant level of support between here and the low from April 16 in the $1322 area,” adds the latest technical analysis from Scotia Mocatta.

The world’s biggest gold exchange traded fund SPDR Gold Trust (ticker: GLD) could lose up to a further four million ounces (almost 125 tonnes) to add to the nearly 300 tonnes it has lost through redemptions since the start of the year, according to analysts at Deutsche Bank.

“We expect that the bulk of the drawdown comes from institutional investors rather than retail investors,” says a report from Deutsche.

“If in fact only institutional selling is occurring in the gold E.T.F. then we expect that nearly two-thirds of the selling that is likely has probably already passed. As SPDR is roughly half of total physically backed E.T.F.s, this could imply a further 4 to 8 million ounces [approx. 125 to 250 tonnes] selling [from all gold E.T.F.s] if macro fundamentals continue to move against gold.”

“In the short term, gold prices remain caught between the recent slowdown in US activity and the significant decline in ETF holdings,” adds a note from Goldman Sachs, whose analysts have a 12-month gold forecast of $1390 an ounce.

“While the sell-off in gold prices has been faster than we expected, with prices below our near-term forecasts, further unwind of ETF positions would likely continue to precipitate this decline…going forward, we expect that gold prices will continue to decline should our economists’ forecast for a reacceleration in US growth later this year prove correct.”

“Gold is likely to remain sensitive to potential dialog regarding the Fed’s QE intentions,” adds a note from HSBC, referring to the US Federal Reserve’s ongoing $85 billion a month quantitative easing policy.

“Further comments by Fed members for scaling back QE would be negative for bullion prices.”

Silver meantime fell to around $23 an ou8nce this morning, like gold hitting a three-week low, as other commodities also dipped and US Treasury bonds gained.

On the currency markets, the Euro fell to a six-week low against the Dollar Wednesday, while the Yen touched a fresh four-and-a-half year low, as Japan’s Nikkei 225 index breached 15,000 for the first time in over five years.

Over in Europe, France fell back into recession in the first quarter, according to provisional GDP data published Wednesday that show a second successive quarter of negative growth. German Q1 growth meantime was 0.1%, provisional figures show, less than the consensus forecast among analysts. GDP for the Eurozone as a whole contracted 0.2% in Q1, data published this morning show, to make a 1% year-on-year drop in economic output.

Ratings agency Fitch meantime upgraded its credit rating for Greece Tuesday, citing progress on cutting the government budget deficit, although Fitch still rates Greek government bonds as junk with a rating of B-.

The latest Bank of England Quarterly Inflation report, published this morning, shows a “welcome change in the economic outlook”, according to outgoing governor Mervyn King.

“Today’s projections are for growth to be a little stronger and inflation a little weaker than we expected three months ago,” King told reporters this morning.

“That is the first time I have been able to say that since before the financial crisis.”

King added however that “the challenges facing central bankers are as great as they have ever been”.

Ben Traynor

BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben can be found on Google+

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.