Gold prices rose on Tuesday, supported by weakness in the U.S. dollar index, though receding worries about the outcome of the U.S. election and expectations of a U.S. rate increase in December could mean lower levels.
Gold and silver prices ended the U.S. day session moderately higher Tuesday. Short covering in the futures market and perceived value-buying in the cash market were featured today. December Comex gold was last up $6.90 an ounce at $1,263.50. December Comex silver was last up $0.176 at $17.645 an ounce.
The euro was down a hair against the U.S. dollar. The yen and British pound were up. It’s no surprise there should be conflicted signals among trading trends given the mixed messages coming out of the Fed.
Commerzbank says the long liquidation in gold futures of more than 106,000 contracts during the last two reporting weeks amounts to 331 tonnes of gold – albeit only on paper – although this selling is likely to ease up. Traders liquidate futures positions to book profits or limit losses, often based on views of where prices are headed next. The amount in gold terms corresponds to 5 ½ weeks of global gold-mining production the bank says. “And it shows how much gold can be shifted around via the futures market. After all, the physically backed gold ETFs (exchange-traded funds) recorded inflows of a mere 14.4 tonnes in the period under review. Based on the average ETF daily inflow of three tonnes so far this year, ETF investors would have to buy gold on 112 days of trading or for a good five months in order to offset the sales on the futures market in the two-week period under review.” Another way to illustrate the selling would be to consider the average monthly gold imports of 70 tonnes so far this year from key consuming nations China and India, Commerzbank says. “We believe that the selling pressure from speculative financial investors should abate, however,” Commerzbank continues.
Gold is set to rise about 7 percent by the time of the London Bullion Market Association conference in October 2017, according to a survey of people attending this year’s gathering in Singapore. Silver will gain 18 percent.
The yellow metal will trade at $1,347.40 an ounce in a year’s time compared with $1,262.40 on Wednesday, while silver will change hands at $20.90 an ounce from $17.65, the survey showed. Last October, attendees predicted the price would be $1,160 in 12 months’ time, about $100 less than it is now.
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