The rebound in Gold was not accompanied by weakness in the U.S. dollar

Gold rebounded Thursday from earlier losses as the broader financial markets returned to positive territory in afternoon trading. COMEX gold futures fell below $1,600 per ounce this morning but later climbed toward $1,625, while silver bounced back from $28.69 to trade higher by 1.0% at $29.37 per ounce.

The rebound in Gold was not accompanied by weakness in the U.S. dollar, however, as the greenback maintained the large majority of its gains against a composite of foreign currencies. The euro remained particularly weak against the dollar, as it fell 1.2% to 1.2791.

While Macquarie discussed several near-term headwinds for the sector, it reiterated its longer-term bullish outlook for the gold price and the shares of gold producers. The firm’s favorable stance was based in large part on the expectation that negative real interest rates will remain in place for the foreseeable future. Additionally, Macquarie noted that the firm’s precious metals strategist, Stephen Harris, is forecasting a 2012 average gold price of $2,006 per ounce.

“Gold prices have been driven by the outlook for US real short-term rates,” Macquarie wrote in a report to clients. “Gold has historically gained nearly 25% when real US rates have been below zero. With policy rates at zero and substantial slack remaining in the US economy…real US rates are likely to remain negative for the next several years. Market conviction in that view may increase in early 2012 if the Fed moves, as we expect, to tie future rate policy directly to an unemployment rate target.”

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