Gold price held steady near $1,719 per ounce

The gold price held steady near $1,719 per ounce Wednesday morning as the gold consolidated following yesterday’s rally. The price of gold oscillated between gains and losses in overnight trading as it mirrored the general path of the euro/U.S. dollar currency cross. The euro traded near unchanged against the greenback at 1.3319 this morning, while European equity markets were mixed. U.S. markets looked to open moderately in the black, with S&P 500 futures up 0.4% at 1,195.25.

Commenting on the outlook for the gold price, J.P. Morgan metals strategist Michael Jansen wrote in a note to clients on Monday that “In as much as broader financial deleveraging is continuing to pressure the gold price the reality is that the retail sector is a strong buyer on dips as judged by the move towards record levels on length in the ETF sector, now above the 2350mt mark.”

“Gold’s next level of main resistance is in the $1730 – $1770 area,” Jansen added. “We remain friendly basis the ongoing instability both in the US and Europe around sovereign finances but note that gold continues to be a victim of the broader USD squeeze that has seen the USD rally to around 80 on the DXY index after spending the majority of this year bumping around in the 72-75 trading range. There is some secondary US home sales data out today (expected at 315k for the month of October, a fractional increase from September) and the key focus will be on headlines and sentiment as it pertains for the direction of EU and ECB policy in the next two weeks.”

Jansen went on to say that “In this environment we think that the base metals will struggle to maintain upside momentum but do expect to see bottom-picking emerge in the precious metals space. The gold market is quite clean in terms of positioning in the leveraged space and the consolidation in the $1680-$1700 area seems to have seen a strong change of hands in positioning; the weak longs bailing.” He concluded by predicting that the gold price will “grind out a move towards the $1770-$1800 area in the coming month.”

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