Intraday Market Thoughts

Gold Bears Tamed Like Three Lions

by Adam Button
Jun 20, 2014 0:12

Gold cut through resistance levels like Suarez cut through the English defense on Thursday, sparking a massive rally in gold.  The three lions can take some solace in the strength of their currency as the pound led the FX market and touched the highest since 2008. Comment's from Kuroda are due later.  After yesterday's new Premium note on GBPUSD and EURUSD were issued, sterling went deeper in the money with 170 pips in the green after the 190-pip play in the prior long hit its final target at 1.6990. We also altered the final target in one of the 2 EURUSD shorts. 3 charts on GBPUSD and EURUSD.  All the trades are in the Premium Insights.

The only thing worse than being a gold bear on Thursday was being a gold bear and an English football fan. The $41 climb to $1320 was the largest one-day rise in 9 months and sent gold to the highest since April. The 55, 100 and 200-day moving averages broke along with the downtrend since April and the May high.

The rally was kicked off by the continued dovish tilt at the Fed. Shorts repeatedly tried to stall the advance at the key levels but were squeezed into submission. Short term indicators are now extremely overbought and if that doesn't spark a retracement in gold then the sellers may appear at $1331. Overall, a parabolic move like the one in gold emphasizes the need to manage risk because there's no telling when it will stop.

Another chart that could have a long way to run is cable. The pound took advantage of the weak dollar and touched 1.7063 on Thursday and finally closed above 1.7000 however the close was fractionally below the 2009 high of 1.7043 and that's an important level to watch.

Economists continue to bring forward estimates for UK rate hikes and more confirmation of a hike this year underpin the fundamental case for the pound. The risks are on the US dollar side where a solid Philly Fed and good jobless claims numbers underscored an economy that's on the upswing after a terrible first quarter.

USD/JPY sagged to 101.74 but rebounded to 102.00 later. The focus will be on the yen when BOJ governor Kuroda speaks at 0636 GMT (that unusual time is not a typo). His comments are at a banking conference so they're likely to have a monetary policy bent.

Act Exp Prev GMT
Continuing Jobless Claims
2,561K 2,600K 2,615K Jun 19 12:30
Initial Jobless Claims
312K 314K 318K Jun 19 12:30
Jobless Claims 4-Week Avg.
311.75K 315.50K Jun 19 12:30
Philly Fed Business Conditions
52.0 37.4 Jun 19 14:00
Philly Fed Employment
11.9 7.8 Jun 19 14:00

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