Goldman also reiterated its gold price target of $1,840 per ounce

The gold price fell $3.22, or 0.2%, to $1,659.38 per ounce Monday morning as the U.S. dollar held firm against a basket of foreign currencies.  The price of gold climbed to as high as $1,666 in overnight trading, but turned sharply lower to $1,645 after the U.S. Commerce Department reported that personal spending rose at 0.3% in March – below the 0.5% consensus estimate among economists.  While the gold price normally benefits from disappointing economic data, today the yellow metal retreated alongside the broader commodities complex.

Analysts at Goldman Sachs echoed Bank of America’s cautious economic outlook in a recent note to clients and discussed the positive implications for the gold price.  The firm wrote it expects the price of gold to resume its ascent “as subdued US growth reduces the market’s expectations of real rates and perhaps, most importantly and counter to much of the current market feeling, suggests that the anticipated North American growth slowdown will see a return by the U.S. Fed to some form of quantitative easing.”  Goldman also reiterated its gold price target of $1,840 per ounce.

Looking ahead to the coming week, a slew of additional U.S. economic data will arrive for the financial markets and the Federal Reserve to scrutinize.  Along with reports on Personal Income, Personal Spending, and the Chicago Purchasing Managers’ Index today, the ISM Index, Construction Spending, and Auto Sales data will be announced on Tuesday.  The ADP Employment report is due out on Wednesday, while weekly jobless claims and the ISM Services data will be released on Thursday.  The week then concludes on Friday with the most closely-followed data – the monthly non-farm payrolls and unemployment report.

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