Range bound on gold for the near term between $1,600 – $1,800 per ounce

The gold price stabilized near $1,677 per ounce Tuesday amid a relatively quiet morning on Wall Street.  The gold price held in a tight range between $1,673 and $1,682 in overnight trading, Despite Monday’s move higher, the price of gold remains near the midpoint of the area it has occupied for the better part of this year. 

Jeff Wright, a managing director and senior research analyst at Global Hunter Securities, wrote in a note to clients that he sees the yellow metal continuing to consolidate in the near-term. “I still believe we are range bound on gold for the near term between $1,600 – $1,800 per ounce;” Wright stated, “and do not see this changing without further quantitative easing by the U.S. Federal Reserve, significant progress towards resolving European debt crisis or a collapse of the euro.”

In contrast to Global Hunter Securities, one firm that remained bullish on the gold price was Bank of America Merrill Lynch (BofA).  Yesterday, BofA metals strategist Michael Widmer reiterated his forecast for the price of gold to reach $2,000 per ounce in the next 12 months. In his report, the firm contended that “We believe the trajectory of U.S. gross domestic product growth (and linked to that, movements in Treasury yields) will be critical for gold prices. Our base case is that economic activity in the U.S. will slow from current levels, with the Fed likely announcing another round of quantitative easing in 2H2012, which would be bullish for 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 waiting
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