Gold prices were buoyed this morning in part by moderate weakness in the U.S. dollar

The gold price advanced modestly on Wednesday alongside other commodities as U.S. financial markets reopened following two days of closures due to Hurricane Sandy.  The spot price of gold rose as much as $12.21, or 0.7%, to $1,722.47 per ounce after consolidating near $1,710 earlier this week in electronic trading.  Gold prices were buoyed this morning in part by moderate weakness in the U.S. dollar, which fell 0.4% against a basket of foreign currencies.

Looking ahead to the remainder of the week, many market strategists expect trading volumes to be light as many individuals in the financial world remain unable to commute to their offices in New York City due to the subway system remaining closed.  City officials have yet to say when the subway system may reopen, but it is unlikely to be before Friday.

Despite the substantial damage caused by Hurricane Sandy, the U.S. Labor Department affirmed that it will release the highly-anticipated October non-farm payrolls report on Friday.  The closely-followed employment data is likely to serve as a key catalyst for both the gold price and the broader financial markets.

Nevertheless, Mitsui Precious Metals analyst David Jollie wrote in a note to clients today that he sees the price of gold remaining range-bound in the near term due to uncertainty ahead of next week’s U.S. presidential election.  “People are not keen to add risk to their portfolios ahead of that,” Jollie contended.

Analysts at UBS noted in their latest market report that the recent stabilization in gold prices above $1,700 per ounce ounce has been a constructive development ahead of a resumption of the yellow metal’s rally that occurred between June and September.  However, UBS cautioned that “There are those who are still looking for another dip, perhaps one that offers an opportunity to jump in sub-$1700, between now and year-end…The clear downtrend from earlier in the month has now been replaced by this consolidation phase. But the possibility of another attempt on the downside certainly cannot be ruled out, especially with U.S. nonfarm payrolls coming up and the U.S. elections looming.”

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