Gold prices remain mired in a trading range

The gold price held steady at $1499.85 per ounce Friday morning after news that jobless claims in the U.S. rose yet again in the most recent week. The price of Gold stabilized as data showed that applications for unemployment benefits rose to 428,000, an indication that the jobs market continues to remain weak. The challenging labor market has been one of the key reasons the U.S. Federal Reserve is holding interest rates near zero – a policy that has provided a tailwind for the gold price.

Gold prices remain mired in a trading range as investors weigh the negative impact on the Goldl of the end of the Fed’s second round of quantitative easing. Yesterday, June 30, is the official end of QE2, a $600 billion asset purchase program designed to keep interest rates low and stimulate the economy.

Looking ahead, several market strategists see the gold price consolidating during the summer, prior to another leg higher in the fall. Barclays Capital analyst Yingxi Yu wrote in a note to clients that “There are still reasons to buy gold, but just not any new reason for now. Market participants are generally positive on gold, but it is a question whether now is the right time to enter the market given the volatility in risky assets such as equities and oil in particular.”

HSBC analyst James Steel commented that “The gold market may not have dropped enough to invite substantial emerging market and safe haven buying to emerge. Longer term, we remain bullish. The strength of the CHF (Swiss Franc) shows there is still plenty of nervous safe haven buying that could easily shift into gold.”

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 wai...
Read more

For the gold price, two outcomes are possible.

Image
For the gold price, two outcomes are possible. First is a return to or near the April low ($1,277.40). Second is a drop to a lower low, $1,240 - $1,260. Yet a third possible outcome is that the June and December lows were not a double bottom and one further drop may come. I account that the least likely, and look for a low here by the end of the week, but I'm no more'n a nacheral born durnd fool from Tennessee, so what do I know?   You'd think that an institution charged with promoting the gold industry would produce reports that at least cast the best light on gold's prospects. You'd think wrong, if you're thinking about the World Gold Council. They've been negative on gold for, oh, the last 14 years or so. Today they issued a report that contained a nugget about Chinese business using physical gold as collateral for bank credit ($40 bn worth) but they managed to tease a gloomy forecast even out of this inventive monetary use. That and bad ...
Read more

The price of gold advanced as high as $1,603.40 per ounc

Image
The gold price broke out to a new all-time high above $1,600 per ounce Monday morning, rising for the eleventh consecutive trading session. The price of gold advanced as high as $1,603.40 per ounce before backing off to trade just the $1,600 level. The yellow metal gained on the back of a surge in borrowing costs for Italy, the latest European nation to see its bond market come under heavy selling pressure. The lack of a deal to raise the $14.3 trillion debt ceiling also helped boost gold prices. The eleven-day rise in the gold price is the longest winning streak since January of 1980. The gold price delivered another noteworthy performance last week, climbing 3.2% on its way to a series of fresh record highs. With Monday’s advance, the gold price extended its monthly and year-to-date gains to 6.6% and 12.5%, respectively. Last week’s two-day Congressional testimony by Chairman Ben Bernanke on the economy and monetary policy revealed that the Fed remains open to the...
Read more