Market analysis

Gold inches up toward the April high of $1747.36

The high price today has so far reached $1746.99.
the price of gold is trading higher once again. For the day it is currently up $3.72 or 0.79% $1744. The high price has reached $1746.99. That is just short of the April high of $1747.36.

Looking at the daily chart, the price moved above a topside trend line (bull pennant formed) at $1717.70 yesterday. The break above that level is also a break above the topside bull pennant formation. That is a bullish move, and opens up the door for further upside momentum. The 1st hurdle is the April high. Get above and we should see further upside momentum. Taking a broader look from the weekly chart, the high price going back to November 2012 comes in at $1754.46. Above that and traders will be focused on the October 2012 high at $1796.08. A break above that level (and the natural $1800 level), will open the door for a potential run toward the 2011 all time high price of $1921.17.

We currently trade at $1745.50 just off the highs for the day and the April high price of $1746.36.

U.S. Dollar Shrugs Off Weak Data As May Indicators Signal Bottom

The news flow in the last 24 hours has been decidedly negative, with U.S. retail sales falling more than expected, relations between China and the U.S. souring further and Germany slipping into recession. Yet, investors were unfazed, with stocks ending the day flat and USD/JPY recovering earlier losses.

In the U.S., consumer spending dropped 16.4% in the month of April, a record decline for retail sales. Clothing sales were down 78%, electronic sales were down 60% and furniture purchases fell 58%. This follows an 8.7% drop the previous month. Yet, stocks and USD/JPY recovered initial losses because many feel that the worst is behind us for now. States are reopening in May, which should help spending, so its completely feasible for retail sales to rise this month.
In fact, based upon the recovery in the Empire State manufacturing index, which rebounded to -48.5 from -78.2 against expectations of -60, a near-term bottom may be in place – or at least that’s what market participants are hoping. The University of Michigan consumer sentiment index confirms this outlook, as it rebounds from 71.8 to 73.7 in May. However, if U.S. President Donald Trump continues to threaten China, it will be very difficult for stocks to bottom.
Meanwhile, Germany is the first of many countries to report official recessions. Growth contracted significantly in the UK in Q1, and this quarter’s numbers are expected to confirm that they have fallen to the same fate. On Sunday night, Japan is expected to report negative Q1 growth and, with the economy contracting 1.8% in Q4, recession will have also arrived. It is hard for investors to be optimistic in light of these reports, especially as Trump threatens to “cut off the whole relationship” with China. Considering the U.S. reliance on China for chip and pharmaceutical supplies, no one wins in a U.S.-China cold war.
Even though Germany fell into recession, the euro was the best performing currency on Friday. Lockdown measures are easing across the region. Italy announced that it would allow free movement within the country from June 3, barring specific local restrictions. Germany is loosening quarantine restrictions for travellers arriving from EU, Schengen Area and UK. The Baltics launched a travel bubble that would allow citizens and residents of Lithuania, Latvia and Estonia to travel freely within the region. Investors see all of these steps as a move in the right direction for the Eurozone and drove the euro higher in response. Eurozone GDP numbers were also in line and not worse than expected with GDP contracting 3.8% in the first quarter.
In contrast, sterling was one of the worst performers, falling more than 1%. We expect that to remain the case in the coming week. No UK economic reports were released today, but Brexit talks between the UK and the EU went no where this week. There was very little progress made. And Michel Barnier, the European Commission's head of the task force for relations with the United Kingdom, is determined but not optimistic that there will be an agreement. He also said the UK is stepping up preparations for no deal. Like the U.S., we expect ugly UK labor market and consumer spending numbers next week.
All three of the commodity currencies traded lower, with the New Zealand dollar leading the slide. New Zealand’s manufacturing PMI index plunged to 26.1 in the month of April confirming the Reserve Bank’s negative outlook and validating their latest decision to double Quantitative Easing. We expect similar weakness in next week’s services and retail sales figures. Chinese data was also weak, putting pressure on Aussie, with industrial production and retail sales falling in the month of April. The Canadian dollar will be in focus next week with inflation and retail sales numbers scheduled for release.

WTI Crude Oil Speculator’s Bullish Net Positions Bounced Back This Week

Large energy speculators boosted their bullish net positions in the WTI Crude Oil futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of WTI Crude Oil futures, traded by large speculators and hedge funds, totaled a net position of 541,019 contracts in the data reported through Tuesday, May 12th. This was a weekly gain of 10,407 net contracts from the previous week which had a total of 530,612 net contracts.
The week’s net position was the result of the gross bullish position (longs) falling by -13,355 contracts (to a weekly total of 709,557 contracts) but were overcome by the gross bearish position (shorts) which fell by -23,762 contracts for the week (to a total of 168,538 contracts).
Crude oil speculative net positions bounced back this week following last week’s sharp decline of -58,778 contracts. The crude net position has risen in five out of the past six weeks and has added a total of +105,911 contracts to the bullish position in that time-frame. Overall, the current bullish standing is now over the +500,000 net contract level for the fifth consecutive week.
The commercial traders' position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -557,971 contracts on the week. This was a weekly loss of -21,073 contracts from the total net of -536,898 contracts reported the previous week.

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the WTI Crude Oil Futures (Front Month) closed at approximately $25.78 which was an increase of $1.22 from the previous close of $24.56, according to unofficial market data.

Price Analysis 5/15: BTC, ETH, XRP, BCH, BSV, LTC, BNB, EOS, XTZ, XLM

The action in altcoins has become coin specific, meaning, traders should remain with those that are in an uptrend as they are likely to follow Bitcoin if it moves higher. A month after the first halving, Bitcoin (BTC) moved up by 7% but following the second halving, the price slipped by 10% in a month. This suggests that if history were to repeat itself, the top-ranked cryptocurrency on CoinMarketCap will remain volatile but a large move in either direction is unlikely in the first month. However, the derivatives markets could be giving a signal that this time is different.

Murmurs of negative interest rates have also increased in the U.S. and a report by Stack Funds suggests that if negative rates become a reality, institutional investors would be forced to look for alternative assets to generate higher returns. With Bitcoin outperforming the U.S. stock markets by a wide margin and doubling gold’s gains year-to-date, institutional interest is likely to rise. The fundamentals of Bitcoin continue to paint a bullish picture and the derivatives traders are also expecting a trend defining move to start soon. Let’s study the charts to spot the critical levels that could indicate the start of a new trend in major cryptocurrencies.

15 MAY 2020

Germany's DAX 30 Index

The DAX closed Friday on a positive note. However, on a weekly basis, the German benchmark suffered losses. The sharpest slump in growth since the great financial crisis had only a brief impact on share prices. Even the new skirmishes between the USA and China could not dampen the mood of investors for a long time.

The DAX ended Friday's trading with a plus of 1.24% at 10,465.17 points. On a weekly basis, the German stock barometer fell by 4.09%. The MDAX rose by 1.20% to 23,270.68 points and the SDAX advanced by 0.49% to 10,243.07 points. The technology-driven TecDAX rose by 0.17%.
On the corporate side, the focus was again on Wirecard shares. The stocks of the German payment services provider collapsed by 8.71%. They reached their lowest level since mid-September 2017 at EUR 72.35. According to a report by Reuters, the German financial supervisory authority BaFin is not planning a ban on short selling of Wirecard shares. Recently, hedge funds have shown a sharp rise in interest in selling the share. According to the Bundesanzeiger, about 10 percent of all Wirecard shares are currently being sold short. At the end of April, KPMG had published a special report, which, however, was unable to dispel the remaining doubts about Wirecard's business practices. As a result, the short sellers increased their positions and pushed the share price down by more than 42 percent since 28th of April. Among the winners in the DAX were the stocks of Volkswagen, Deutsche Post, Continental and RWE with a gain of 4.37 to 3.12%.