In the medium to long term gold should be able to assert its status as a store of value and recommence its upswing

The gold price dipped $6.15, or 0.4%, to $1,644.39 per ounce Wednesday morning amid modest strength in the U.S. dollar.  In overnight trading, the spot price of gold fell from $1,655 to $1,638 but later pared its losses as U.S. financial markets opened.

Scotia Mocatta’s Simon Weeks, who publishes a daily note on the price of gold, commented yesterday that “Clearly enough in the way of conflicting signals out there to allow the Optionality of the $1650 level to effectively dictate and thus contain proceedings in the short term and yesterday’s $10 range either side of this level would tend to confirm that view…Frankly we are in data rich environment at the moment, or to put it another way, a target rich environment and as such there will likely be several more opportunities for knee jerk reactions in the coming days.”

Weeks went on to say that “There clearly are conflicting signals out there but there was a time when news such as we are seeing at the moment from Spain and indeed others for that matter would have lit a fire under the gold bonfire but that clearly isn’t happening and that should worry longer term holders who, for now at least, feel relatively insulated from the markets short term volatility – sideways to lower for sure for now but the longer gold fails to lead from the front and effectively plays second fiddle the greater the chance that somebody takes a strategic decision to kick their holding into touch – clearly the bad news is in the price it’s as simple or as complicated as that.”

In contrast to Weeks, analysts at Commerzbank were more constructive on the outlook for the gold price.  In a report on Tuesday, the firm wrote that investors will closely monitoring Europe in light of escalating concerns that Spain may succumb to a financial bailout.  “In the medium to long term gold should be able to assert its status as a store of value and recommence its upswing,” the firm contended.

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