Investor do not believe gold’s long-term upwards trend to be under threat

The gold price plunged Monday morning, sliding $39.65 to $1,672 per ounce. Investors shed long gold positions and investments tied to the gold price amid heightened worries that the continued refusal of the European Central Bank (ECB) to more aggressively aid Italy and Spain will lead to a fresh deflation episode. S&P 500 stock futures fell 13.30 to 1239.70 while oil sank $1.28 to $98.12 per barrel.

Despite gold’s muted initial reaction to the outcome of the December 9 meeting of 27 European leaders, the yellow metal is facing heavy selling in the aftermath of the latest European summit. Officials were unable to achieve unanimous support for a new agreement on tighter fiscal regulations, although the group said it would pursue an intergovernmental treaty with the majority of member nations. In addition, the European nations agreed to provide the International Monetary Fund (IMF) with up to €200 billion in bilateral loans that could be utilized to provide financial support to fiscally strapped nations such as Portugal, Spain, and Italy.

David Mackie, a J.P. Morgan economist in London, commented that “It’s not the grand bargain some people had been hoping for. A door has been opened with the IMF channel, but some people may say that 200 billion euros is simply not enough.”

As for the impact on the gold price, analysts at Commerzbank argued in a note to clients that the lack of financial firepower emanating from the EU summit could present a headwind for the yellow metal in the shorter-term. Gold’s “latest relative weakness can be expected to prompt investors – who recently took a positive view of gold – to continue shedding their positions,” the firm wrote. “A possible price slide below $1,700 may thus accelerate a further slump.” However, Commerzbank also contended that “Despite these short-term tendencies, we do not believe gold’s long-term upwards trend to be under threat.”

Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also waiting
Read more

Gold Price Futures (GC) Technical Analysis – Trader Reaction to Minor 50% Level at $1954.80 Sets the Tone

Image
  Gold futures closed lower on Thursday but up from its low of the session as investors battled a number of factors including U.S. economic data and outside market influences. Earlier in the session, gold fell over 1%, as positive economic data elevated hopes for a quick recovery while dampening the investment appeal of the precious metal. On Thursday, December Comex gold futures settled at $1937.40, down $11.60 or -0.60%. On the data front, a drop in U.S. jobless claims reported Thursday and positive manufacturing data reported earlier in the week are taking some shine off gold. A weaker Euro is also weighing on dollar-denominated gold by driving up thU.S. Dollar Index. U.S. weekly jobless claims fell below 1 million last week for the second time since the pandemic started, but did not signal a strong recovery in the labor market because the drop largely reflected a change in the methodology used to address seasonal fluctuations in data. Earlier in the week, a report s
Read more

India, not Trump, is the real reason behind the crash in gold prices

Image
If you have been puzzled about the crash in gold prices after Donald Trump's election, you are in the company of almost every analyst and media outlet in the western world. Gold and silver are a major part of the research at The Arora Report. A combination of our proven precious metal algorithms, extensive resources and knowledge of the emerging markets led us to alert subscribers to The Arora Report early that gold was about to crash and the reason behind it. Immediately after the election, the net position of The Arora Report in gold, silver and miners has been short as part of a sophisticated strategy.
Read more