gold has become increasingly undervalued relative to where we see fair value: $1,640

The gold price have started the week on the front foot, helped initially by a stronger Euro but also by firmer Asian and European equity markets after the latest Greek polls suggested that pro-bailout parties would garner enough votes to form a government. Turnover remains rather thin however, owing to the US Memorial Day holiday. While Greece looks a bit more stable, albeit only thanks to one opinion poll taken 3 weeks ahead of the election, Spain continues to sink into the mire with the
deteriorating BFA-Bankia situation the most visible of the country’s many problems.

The freefall in net speculative length finally ended, although the gains of the past week were meagre — only 10.2 tonnes, compared to the 140.0 tonnes lost in the previous two weeks. The net improvement was the result of 21.0 tonnes added to speculative longs. Casting a shadow on this improvement was the 10.8 tonnes added to shorts — marking the third successive week of increase. Net speculative length is only marginally off its 12-month low (344.0 tonnes compared to 333.8 tonnes), and consequently decidedly weak, compared to historical norms. So, while the mild turnaround is encouraging, there is still a long way to go before we’d say that confidence in gold has returned.

With gold below $1,600, we have seen increasing demand from Asia. Our Standard Bank Gold Physical Flow Index (GPFI) remains positive and has recently pushed higher. We still believe that gold has become increasingly undervalued relative to where we see fair value: $1,640.

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