Spot gold, generally seen as a safe haven asset, was trading at $1,164.18 an ounce in early Asian trade, up from $1,158.21 seen yesterday.
Gold fell $7.47 to $1151.53 in Asia before it climbed up to $1165.65 in early afternoon New York trade and then drifted back lower in the last few hours, but it still ended with a gain of 0.28%. Silver rose to as high as $17.191 and ended with a gain of 1.31%.
Gold prices ended the U.S. day session firmer Monday, after hitting a 10-month low overnight. Some bargain hunting in the cash market and short covering in the futures market were featured. Still, bearish technical charts and a keener “risk-on” psychology in the marketplace at present remain significantly bearish elements for safe-haven gold. February Comex gold was last up $5.50 an ounce at $1,167.70. March Comex silver was last up $0.263 at $17.225 an ounce.
Also supportive for the precious metals markets Monday were the key “outside markets” being in a bullish daily posture. Nymex crude oil futures prices were sharply higher and hit a 16-month high of $54.51 overnight. OPEC and non-OPEC oil producers on Saturday came to an agreement to cut their collective oil production by just over a half-million barrels a day, which does not include the 1.2 million barrels a day that OPEC already agreed to cut in September. Reports said the combined cuts represent about 2% of the world oil supply.
The marketplace is looking ahead to this week’s U.S. Federal Reserve FOMC meeting, which begins Tuesday morning and ends Wednesday afternoon with a statement. Most believe the Fed will raise interest rates for the first time in a year. In fact, the Fed funds futures market shows a 100% chance the Fed will raise U.S. interest rates this week. As for markets’ reactions to the FOMC statement, markets have already factored into their price structures a Fed rate hike. Thus, what could develop Wednesday afternoon and in the following days is a “sell the rumor, buy the fact” scenario for the metals markets and other markets.
“The Fed's statement is much more important on this occasion than the rate hike because it’s been very widely expected that rates will increase at this meeting,” said ICBC Standard Bank analyst Tom Kendall.
“It's unlikely that the Fed would do anything different to what's expected so it is going to be about what the tone of that statement is about growth next year.”
Technically, February gold futures prices closed near the session high today on short covering after hitting a 10-month low early on. The gold bears have the solid overall near-term technical advantage. There are still no early clues of a market bottom. Prices are in a six-month-old downtrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,200.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at $1,125.00. First resistance is seen at $1,175.00 and then at $1,182.30. First support is seen at today’s low of $1,152.50 and then at $1,150.00. Wyckoff's Market Rating: 2.0
SPDR Gold Trust (GLD), the world's largest gold-backed exchange-traded fund, said its holdings fell 0.14 percent to 856.26 tonnes on Monday from Friday. [GOL/ETF]
Wall Street and Main Street alike look for gold to rise next week even though the U.S. Federal Open Market Committee is expected to hike interest rates by 25 basis points, according to the weekly Kitco News gold survey.
Normally, rate hikes hurt gold prices for a number of reasons, including potential to lift the U.S. dollar. However, gold prices have already fallen in recent weeks in anticipation of tighter monetary policy, so analysts say there is potential for gold to now bounce.
Nineteen Wall Street analysts and traders took part in this week’s survey. Eleven, or 58%, called for gold to rise. Five, or 26%, were bearish, while the remaining three, or 16%, were either undecided or expected prices to be flat.
Meanwhile, 697 Main Street participants submitted votes in either an online or Twitter survey. A total of 386respondents, or 55%, said they were bullish for the week ahead, while 208, or 30%, were bearish. The neutral votes totaled 96, or 14%.
In last Friday’s gold survey, 60% of Wall Street voters were bullish on gold for the current week now winding down, while 58% of Main Street was bearish. As of 11:05 a.m. EST, Comex February gold was down $12.30 for the week to $1,165.50 an ounce. Assuming gold remains weaker into the close, this would be the second straight week Main Street was right while forecasting a weekly decline in gold, while Wall Street was wrong.
Going back to mid-May when this reporter took over the Kitco News survey, however, Wall Street has held the upper hand. Wall Street forecast correctly 21 times and was wrong eight times, a winning percentage of 72%.Main Street had a 18-11 mark during this period for 62%.
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, is among those looking for gold to start recovering from the sell-off over the last month since Republican Donald Trump won the U.S. presidential election.
“The correction, based on dollar’s rally following the Trump victory, has run its course, at least temporarily, and gold is due for a bounce,” he said. “Once the Fed’s rate hike is over with, gold will likely see a relief rally.”
Phil Flynn, senior market analyst with at Price Futures Group, also predicts that gold can get a bounce once the Fed meeting – and expected rate hike – is “out of the way.” Additionally, he cites potential buying as the market factors in expected gold purchases after recent news gold is now compliant with Sharia law, making the yellow metal acceptable as an investment in Islamic finance.
“It (gold) is due for a bounce because it’s fallen so hard,” Flynn added.
Bob Haberkorn, senior commodities broker with RJO Futures, looks for gold to be higher, assuming the Fed doesn’t sound overly hawkish on interest-rate direction for 2017.
A Fed hike next week is largely factored into prices, meaning market participants will scrutinize Fed commentary for clues on what can be expected from policymakers next year. Haberkorn said he envisions a hike but then somewhat neutral “wait-and-see” language from the Fed.
Reference: Xinhua, CNBC, Gold Seeker, Kitco, Business-standard
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