No fear of Swiss gold rush – SNB action inevitable at 1.20 says UBS


USB forex strategist Beat Siegenthaler says the gold initiative appears to have a low chance of success and that  we might get some clue of that at the next poll.

If the “yes” vote fades in the poll then the issue will fade ahead of the referendum he says. If the “yes’s” increase then we will likely see pressure on EUR/CHF.

Which ever way the vote goes he doesn’t see many scenarios where the SNB would remove the peg.

  • Removing the floor would require political discussions and a parliamentary decision
  • SNB unlikely to impose negative rates, unless gold vote goes against them but would be very cautious of doing so
  • SNB may hope that intervention is sufficient but says any big jump won’t last, until negative rates are introduced
  • Biggest impact could be on EUR crosses, bonds and equities rather than EUR/CHF
  • SNB may be forced to enter somewhere at or above 1.2010

EUR/CHF has made a new low today, by only a fraction of a pip I think. Yesterday’s low was 1.20218. Today it’s 1.20213. Makes all the difference to the charts don’t you know ;-)

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Author: Ryan Littlestone, ForexLive

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Gold rebounds after sharp plunge to new low

Gold (daily chart shown below) has rebounded back up near key resistance around the major 1180 support/resistance level after having plunged to a new four-year low around 1130 late last week.

Prior to this new low, the precious metal had established a third test of the 1180 support level about a month ago in early October before bouncing. This followed earlier tests of 1180 support in June and December of 2013.


Slightly more than a week ago at the very end of October, gold once again dropped down to 1180, but this time proceeded to break down aggressively below that key support level. The breakdown confirmed a continuation of the long-term downtrend extending back at least two years to October of 2012.

Currently appearing to back off from the noted 1180 level, this time as resistance, gold could potentially begin to target new long-term lows around the 1100 downside support level if it continues trading below 1180.

To the upside, in the event of any breakout back above 1180, the 1200 level should serve as a key resistance level further to the upside.

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Author: James Chen for City Index


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Euro Area Limping Toward Deflation Fuels QE Calls as ECB Meets


The euro area is edging closer to the moment that deflation risks become reality.

Companies cut selling prices by the most since 2010 as they attempted to boost sales in the face of a flagging economy and slowing new orders, Markit Economics said today. This in turn is squeezing profit margins and reducing resources for hiring and investing, damping chances of an economic rebound, the London-based company said.

The European Central Bank is pumping money into the banking system to fuel inflation that hasn’t met policy makers’ goal since early last year. With a gauge of manufacturing and services activity pointing to sluggish growth at best, it is under pressure to add to long-term loans and already announced asset-purchase plans to prevent a spiral of price declines in the 18-nation currency bloc.

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Author, Alessandro Speciale for


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Prepare for Gold Rally If Swiss Referendum Passes

(Bloomberg) There are people in Switzerland who resent that the country sold away much of its gold last decade. They may be a splinter group of Swiss politics, but they’re a persistent bunch.

And if they get their way in a referendum this month, these voters will make their presence known to gold traders around the world.

The proposal from the “Save Our Swiss Gold” proponents is simple: Force the central bank to build its bullion position up to at least 20 percent of total assets from 8 percent today. Holding 522 billion Swiss francs ($544 billion) of assets in its coffers, the Swiss National Bank would have to buy at least 1,500 tons of gold, costing about $56.3 billion at current prices, to get to the required threshold by 2019.

Those purchases, equal to about 7 percent of annual global demand, would trigger an 18 percent rally, giving a lift to gold bulls who’ve suffered 32 percent losses in the past two years, Bank of America Corp. estimates. With polls showing voters split before the Nov. 30 referendum, the SNB and national government are warning that such a move could undermine efforts to prevent the franc from surging against the euro and erode the bank’s annual dividend distribution to regional governments.

“It would have a major impact if it passes,” said Joni Teves, an analyst at UBS AG in London. “If they do launch a buying program, it would have effectively a constant bid in the market.”



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