Gold was little changed on Wednesday in the wake of minutes from the
latest U.S. Federal Reserve meeting, but the precious metal was trading
above the two-week low hit in the last session as stock markets slid on
fresh trade tensions.
Spot gold was steady at $1,273.68 per ounce, having fallen to its lowest level since May 3 on Tuesday at $1,268.97.
U.S. gold futures settled 0.1% higher at $1,274.20.
minutes from U.S. Fed’s last meeting showed policymakers agreed that
their current patient approach to setting monetary policy could remain
in place “for some time.”
“Not many surprises here and not many
were expected. I would note though that this Fed meeting happened before
China backtracked on the trade talks. At the next meeting, almost
certainly there will be more caution,” said Tai Wong, head of base and
precious metals derivatives trading at BMO.
Gold prices rose on Friday and were set to post a
weekly rise as the United States raised tariffs on Chinese goods,
exacerbating fears of a global economic slowdown, while palladium surged
more than 5% on technical buying and short covering.
The United States intensified a tariff
war with China on Friday by hiking levies on $200 billion worth of
Chinese goods. U.S. President Donald Trump said on Friday he was in no
hurry to sign a trade deal with China.
The escalation in the
U.S.-China trade dispute has weighed on stock markets worldwide and
boosted demand for assets viewed as safer.
“Gold is up today and will be up
in the short term until there is a concrete resolution to the
continuing trade tensions between the United States and China,” said Rob
Lutts, chief investment officer at Cabot Wealth Management.
Spot gold gained 0.2% to $1,286.56 per ounce and is up about 0.6% so far this week.
U.S. gold futures settled up 0.2% at $1,287.40.
“Gold is kind of inching high because of instability in the equities market,” said INTL FCStone analyst Edward Meir.
Palladium climbed 4.7% to
$1,354.51 per ounce as of 1:32 pm EDT (1732 GMT), having fallen to its
lowest since Jan. 4 at $1,263.85 in the previous session. The metal was
on track for a second straight weekly decline of about 1.2%.
“The price slide (on
Thursday) temporarily made palladium cheaper than gold again for the
first time since the start of the year,” Commerzbank analysts said in a
“The nice $70 bounce in
the palladium prices is on the back of some modest consumer buying after
the move below $1,300 yesterday and short-covering,” said Tai Wong,
head of base and precious metals derivatives trading at BMO.
For gold, the U.S.-China
trade conflict could also force the U.S. Federal Reserve to cut interest
rates, which could further support bullion prices.
Global anxiety has also
seen an uptick as U.S. bombers arrived at a U.S. base in Qatar to
counter what Washington describes as threats from Iran.
“The Iran situation is
not improving. Trump’s policies have led to a change in the dynamics.
We’re not sure whether the changes will make the situation safer or not
but the uncertainty will affect how investors see gold,” Lutts added.
Bullion was also
supported by a weaker dollar which fell after data showed a
smaller-than-expected rise in the U.S. consumer price index last month.
Silver was up 0.2% at $14.78 per ounce, while platinum rose 2.3% to $863.75.
Silver is on course to register a second straight week of declines, while platinum looks set for a third weekly drop in a row.
(Kitco News) – Gold
and silver prices are posting moderate corrective gains in
early-morning dealings Friday, following the sharp losses suffered
Thursday. Overnight, gold did drop to a three-week low, while silver
hit a three-month low. Some mild U.S. inflation data just released is
also helping out the precious metals market bulls. April gold futures
were last up $6.10 an ounce at $1,295.90. May Comex silver was last up
$0.122 at $15.09 an ounce.
The just-released U.S. personal income and spending report for
February came in at up 0.2%, which was in line with market
expectations. The January personal consumption expenditures price index
came in at down 0.1% from December and up 1.8%, year-on-year. Personal
spending in January came in below expectations, at up 0.1% from
December. These numbers fall into the camp of the U.S. monetary policy
doves, who do not want to see U.S. interest rates rise anytime soon.
Metals prices did up-tick after hit report hit the news wires.
Asian and European stock indexes were mostly firmer overnight. U.S.
stock indexes are pointed toward slightly higher openings when the New
York day session begins. Today is the last trading day of the week, of
the month, and of the quarter, which makes it an extra important
trading day from a charts and technical perspective. Traders and
investors are exhibiting a bit more risk appetite late this week, which
has buoyed world stock markets but has helped to sink the safe-haven
gold and silver markets.
The U.S. and China held high-level trade talks in Beijing late
Thursday and Friday. U.S. Treasury Secretary Steven Mnuchin said those
talks were productive. However, Larry Kudlow, President Trump’s
economic advisor, said on Thursday any final U.S.-China trade accord is
likely to come months down the road. There is no clear consensus in
the marketplace on the eventual outcome of the U.S.-China trade talks,
which means that when any final result is announced it is likely to
cause at least some volatility in some markets.
The U.K. Parliament is likely to vote Friday on another option
offered by Prime Minister Theresa May to break the Brexit deadlock.
There are not high expectations for her latest plan to be approved by
the MPs. Today is the day the U.K. was set to leave the European Union.
May’s options moving forward on the matter are increasingly limited,
with speculation of a general election being held in the near future.
The key outside markets today see the U.S. dollar index higher and
hitting another 2.5-week high today. The USDX is back near its recent
multi-month high. Meantime, Nymex crude oil prices are higher and
trading around $60.00 a barrel. Oil prices are still trending higher on
the daily bar chart even though price action has been sideways this
Feb 15 – Gold jumped to a two-week high on
Friday after weak U.S. economic data boosted expectations the U.S.
Federal Reserve would hold pat on monetary tightening, while palladium
matched an all-time high on a prolonged deficit.
Spot gold was up
0.4 percent at $1,317.36 an ounce at 12:47 p.m. EST (1747 GMT), having
touched its highest since Feb. 1 at $1,319.81.
U.S. gold futures rose 0.5 percent to $1,320.60.
While gold is on track for a small weekly gain, it was rangebound for most of the week, with gains on Friday stemmed by a firmer dollar and a rebound in stocks.
Risk appetite in equity and forex markets and positive US dollar in the broad market caused precious metals to decline in broad market.
Precious metals today saw sharp downside move as market scenario
returned to normal following an eventful month. Given the fact that
there is no major market altering events in the week ahead and the fact
that market is set to see a week full of first tier macro data updates,
investor sentiment is positive with plenty of risk appetite across all
major global markets. Further US Dollar gained strength in the broad
market following upbeat US NFP data and ISM Manufacturing PMI released
last Friday. The dollar has retained its strength across Asian and early
European market hours which also added to precious metal market bears.
Brent Crude Climbs Above $60 Per Barrel
Positive US dollar in broad market is always bearish for greenback denominated precious metals. A higher value of USD discourages participants from emerging markets owing to higher exchange rate which further reduces activity in the precious metals market. Risk appetite is currently very high in broad market as headlines last week hinted that China & U.S. managed to come to an agreement on many key issues which improved chances of a trade deal between two nations. As of writing this article, spot gold XAUUSD is trading at $1310.92 per ounce down by 0.51% on the day while US gold futures GCcv1 was trading at $1314.90 per ounce down by 0.54% on the day. Meanwhile, spot silver XAGUSD is trading at $15.75 per ounce down by 0.92% on the day.
Gold prices posted a slight decline on Monday, holding above $1,230 an ounce for a third straight session as traders eyed some weakness in the U.S. dollar a day ahead of the closely watched midterm elections.
“Stepping back from today’s price action, what is most interesting for gold is how well it has held its ground despite a significant rally in the U.S. Dollar Index in recent weeks,” Michael Armbruster, managing partner at Altavest, told MarketWatch. “When it comes to gold, it’s easy to be lulled into a sense of complacency when the U.S. dollar is trending higher along with interest rates.”
Gold for December delivery GCZ8, -0.37% edged down $1, or less than 0.1%, to settle at $1,232.30 an ounce, squarely between the day’s high of $1,236.60 and low of $1,228.40.
The contract ended last week slightly lower after a report showed a U.S. job market that was even stronger than expected—data seen keeping the next Federal Reserve interest-rate hike likely on track for December. Higher rates dull the appeal of nonyielding bullion, while boosting the dollar, making dollar-priced commodities less attractive to investors using other currencies.
Still, data Monday showed the nonmanufacturing index compiled by the Institute for Supply Management slipped to 60.3 last month from a 21-year high of 61.6 in September.
The dollar continued its decline after the ISM services survey, with the ICE U.S. Dollar index DXY, -0.06% down 0.3% at 96.286 in Monday dealings. Last Thursday, gold settled at its highest level in more than three months when the index weakened and as stock markets wrapped up a dismal October.
“Increased risk aversion with the equity markets’ selloff has certainly added a risk-averse boost to gold in recent weeks, but if the dollar starts to lose traction due to the reversal of the U.S.-China trade dispute, then this could be a driver of continued gold strength,” said Richard Perry, analyst at Hantec Markets.
Perry is watching $1,236 as a technical “line in the sand” for gold and says a consistently higher market at that price opens the way to a climb toward $1,266.
Armbruster pointed out that “investors should keep in mind that central banks around the world (China, Russia and others) are reportedly adding to their gold holdings. Such behavior by central banks may trump headwinds from the dollar and interest rates and result in a surprise rally.”
This month’s rally in gold prices may not be over.
That’s because investors are still heavily betting on a decline in the value of the precious metal. When speculators overwhelmingly bet in one direction then a move in the opposite way is often the result.
Bars of gold bullion. Rob Bennett/AP Images for APMEX
Investors wanting to profit from a likely upward move in prices might consider buying the SPDR Gold Shares exchange-traded fund (ticker: GLD) which hold bars of solid gold bullion. Alternatively, try buying December-dated futures contracts on the CME futures exchange.
On October 1, I wrote that speculators were betting so heavily on a further decline in gold prices that we’d likely see a rally. You can read the story here. Starting late January gold prices tumbled until they reached a recent low in mid-August.
However, even as the price stabilized traders held onto those so-called short positions, also known as bets on a decline in prices, and kept betting on further falls in the price.
By early October the negative bets became extreme and hence increased the likelihood of a gold price rally.
(Reuters) – Gold prices fell on Thursday on a strong dollar and a rebound of stocks following a multi-day sell-off globally, taking steam out of bullion’s momentum.
Prices had risen to $1,239.22 earlier, near a more than three-month high of $1,239.68 hit on Tuesday as the stock market sell-off spurred interest in gold, considered a safer investment.
U.S. gold futures GCcv1 settled up $1.3, or 0.11 percent, at $1,232.40
“With equities being higher today, gold is unable to sustain a rally,” said Bob Haberkorn, senior market strategist at RJO Futures, adding that investors looking for safety are opting for Treasuries instead. [US/]
“Normally you would see gold trading significantly higher with this volatility, concerns in equity markets and global economic slowdown. But the fact that the U.S. Federal Reserve is hawkish, gold is having a hard time sustaining any rallies.”
U.S. stocks followed Europe higher on Thursday, a day after Wall Street suffered its worst day since 2011. [MKTS/GLOB]
The government said earlier that the number of Americans receiving unemployment benefits fell to more than a 45-year low, a sign to tight labour market conditions. That will likely keep the U.S. central bank on course to raise interest rates again in December. [nUSNPLEEMN]
Prospects of higher U.S. interest rates are negative for dollar-priced gold as they raise the opportunity cost of holding the bullion.
“The options expiry on Thursday is also dampening volatility in gold as between $1,225 and $1,230. There were about 1.5 million ounces of options that were open, allowing people to play around the range,” said Tai Wong, head of precious and base metals trading at BMO.
The cost of acquisitions has now fallen below the cost of exploration for major miners, and gold prices could benefit from a dwindling resource supply, this according to a recent report from the Edelson Institute.
Sean Brodrick of the Edelson Institute said that if gold prices don’t advance higher from here, many miners are likely to go out of business.
“If companies go out of business, and the only ‘new’ gold ounces come through acquisitions, that means gold supply will go down. And as surely as dawn follows night, prices will go up,” Brodrick said.
His comments come as Barrick Gold recently announced a merger with Randgold, forming the world’s undisputed largest gold miner.
According to the report, the cost of finding gold through exploration has climbed eight-fold since 2007, and gold miners are using up the resources in the ground.