Pages

RSBL Gold Silver Bars/Coins

Showing posts with label United States. Show all posts
Showing posts with label United States. Show all posts

Monday, 14 August 2017

Fundamentals for Gold are strong

As we have noticed in the past months, it was mainly the dollar and Fed actions that were influencing gold prices. But last week geopolitical tensions were fueling gold prices.

Gold was on the move in the past week after a display of threat of the military force by the U.S. and North Korea pushed the safe-haven metal back onto investors' radar.

President Trump said on Tuesday that threats by the Hermit Kingdom would be met by "fire and fury," which was followed up a day later by a North Korea threat to bomb the U.S. territory of Guam.
The yellow metal climbed to $1,285/oz as tensions rose this week, the best level in about two months, driving year-to-date gains to around 11.5%.




Gold has always been considered as a safe haven asset in times of uncertainty. The current rally in gold prices is because of the rise in safe haven demand for gold.

President Donald Trump intensified up his orotundity toward North Korea and its leader on Thursday, warning Pyongyang against attacking Guam or U.S. allies after it disclosed plans to fire missiles over Japan to land near the U.S. Pacific territory.             

Gold prices rose early Wednesday amid rising tensions between the United States and North Korea after the North responded to warnings from U.S.

President Donald Trump with a threat to strike the U.S.territory of Guam.   

Though prices rose on Wednesday and Thursday, by the end of the week, prices more or less stabilized. 

Gold prices held steady after touching their highest in more than two months on Friday, as rising tensions between the United States and North Korea triggered safe-haven buying.

Geopolitical risks can boost demand for assets considered safe-haven investments, such as gold. Although more hostile magniloquence between the U.S. and North officials would temporarily boost gold prices, we see outright military action as unlikely and upward pressure on gold prices stemming from the confrontation as limited.

Meanwhile, a lower-than-expected rise in U.S. consumer prices in July suggesting benign inflation could persuade a cautious Federal Reserve to delay raising interest rates until December.                

Gold is seen being stable over easing out of the geopolitical tensions. But still, a minor escalation over the tensions can once again trigger gold prices. Hence the situation currently is quite unpredictable. 

On the other hand, The Fed expects "very weak" U.S. inflation to rebound thanks to a slide in the dollar and to a labour market that keeps getting hotter, one of the Fed's most influential officials said in comments that reinforce its gradual policy-tightening plan

Gold edged down from two-monthhighs on Monday, 14th August, , as the dollar inched up from last week's lowsand investors kept a close watch on any developments on tensionsover the Korean peninsula.

Summing it up we can say that though the threats from the Koreans have lowered, the fundamentals for gold still seem to be strong.

Tuesday, 1 August 2017

Green back gives backing to gold

It was a quiet Monday for gold on 24th July followed by a little change in gold and silver prices on Tuesday. Spot gold prices were at $1,255.60 per oz and silver at $16.46 per oz, while the PGMs were looking stronger with gains of 0.6%.

Gold’s rebound has found new vigor on the combination of the weaker dollar and the less hawkish US Federal Reserve stance. Dollar weakness has stemmed from the weak political scene in Washington which has resulted in a push in gold prices. Gold is sensitive to moves higher in both U.S. rates and the dollar. Weaker dollar makes gold less expensive for holders of foreign currency, while a rise in U.S. rates lifts the opportunity cost of holding non-yielding assets such as bullion.


Gold prices held steady on Friday as investors locked in profits from the precious metal's rally to six-week highs on Thursday and as markets awaited the release of U.S. second-quarter growth data due later in the day.

U.S. 2Q GDP figures released on Friday showed the economy grew at an annualized pace of 2.6% q/q, slightly missing consensus, with the Core Personal Consumption Expenditure (PCE) topping expectations with a print of 0.9% q/q. The data did little to shift expectations for a December interest rate hike with markets still pricing a roughly 50/50 chance the Fed will hike again this year.

Gold prices rallied for the third consecutive week with the precious metal rallying 1.9% to trade at 1268 ahead of the New York close on Friday. The advance comes alongside continued weakness in the greenback.

The dollar remained under pressure after the Fed said on Wednesday that inflation remains below its 2% target even as near-term risks to the economic outlook appear "roughly balanced". In the past, the Fed judged that weakness in inflation was transitory. The central bank's cautious tone on inflation sparked fresh uncertainty over the possibility of a third rate hike this year.

The greenback was also weakened by data on Thursday showing that initial jobless claims rose by 10,000 to 244,000 last week. Analysts expected jobless claims to rise by 7,000 to 241,000 last week.
Gold prices have done well, especially with equity markets setting fresh highs, but the weaker dollar of late has no doubt helped fuel the rally and it may be that as equities are setting fresh highs, more investors are expecting a correction so may be putting more into havens. Silver has been following gold, platinum prices have struggled to follow gold and palladium is still consolidating after the strong run in May/June. For now we expect the dollar to be the main driver in gold prices.

This week began with a positive note for gold as it Monday held around its highest price in nearly seven weeks as tensions on the Korean peninsula boosted safe-haven demand for the metal and as the U.S. dollar hovered close to multi-month lows.

News that North Korea has conducted yet another missile test spurred a late-week push higher in gold prices which stretched into near-term resistance just ahead of the European close.

The United States flew two supersonic B-1B bombers over the Korean peninsula in a show of force on Sunday and the U.S. ambassador to the United Nations said China, Japan and South Korea needed to do more after Pyongyang's latest missile tests.

Though a weaker dollar is the main driver for gold prices, currently deepening political turmoil in Washington and North Korea's progress on ballistic missiles will all ensure the uncertainty premium continues to support gold's price.

Looking ahead to next week, markets will be closely eyeing central bank interest rate decisions from the Reserve Bank of Australia (RBA) & the Bank of England (BOE) with the highly anticipated U.S. Non-Farm Payroll report slated for Friday. While the broader outlook for bullion remains constructive, prices are eyeing near-term resistance heading into the close of the month and could limit the topside near-term.

Monday, 10 April 2017

Gold being pulled between uncertainities and rate hike

Gold is often used as a hedge against political and financial uncertainty and security risks. And that’s exactly what’s happening with gold currently.

Gold hit a five-month high on Friday after U.S. jobs data dampened expectations that the U.S. Federal Reserve will raise interest rates, but the metal gave up most gains as the dollar rose and safe haven demand ebbed.



Spot gold rose 1.2 percent to $1,265.95 an ounce by during trading hours on Friday, after touching its highest since Nov. 10 at $1,270.46,putting it on track for a fourth consecutive week of gains. U.S. gold futures climbed 1.1 percent to $1,267.60 an ounce. This is the most supportive environment we have seen for gold in some time given that there is geopolitical tension and disappointing U.S. payrolls number.

Data released showed that U.S. employers added the fewest number of workers in 10 months in March, boosting gold, which is most attractive to investors in a low interest rate environment.
Gold was also underpinned by investors looking for safety after the United States fired cruise missiles at a Syrian air base, escalating tensions with Russia and Iran.

Russia, a staunch ally of Syria, said relations between Washington and Moscow had been seriously damaged by the strike, which was in retaliation for a deadly chemical attack on a rebel-held area of Syria.

The precious metal hit a 5-month high as investors sought safe-haven assets after the United States launched cruise missiles against a Syrian air base, potentially escalating tensions with Syrian allies Russia and Iran. U.S. President Donald Trump unleashed the military strikes in response to a deadly chemical attack on a rebel-held area, a U.S. official said on Thursday.

Later in the session, however, safe haven demand faded and the dollar index. DXY climbed to three-week highs which further rose questions that unless the geopolitical risk continues; will the sentiment remain positive for gold?

Investors were cautious ahead of the meeting between U.S. President Donald Trump and Chinese President Xi Jinping, but Trump said on Friday he had made progress in talks and expected them to overcome many problems. Investors had already been on edge as Trump met Chinese leader Xi Jinping on Thursday for talks over flash points such as North Korea and China's huge trade surplus with the United States.      

Gold is often used as a hedge against political and financial uncertainty and security risks. It has benefited alongside other assets considered safe, such as the yen and U.S. Treasury bonds.
Though geo political uncertainties are creating room for gold to rise, we shouldn’t ignore the key influential factor for gold i.e. U.S. interest rate hike.

Increases in U.S. interest rates will prove too much of a headwind for gold prices. As such, we think that the price of gold is likely to fall from about $1,265 today to $1,050 by the end of the year if there is any news coming in from the Fed regarding hike in interest rates.

Clearly this raises the stakes and we expect to see gold prices continuing to push higher in the short-term, at least until there is some clarity around whether this is a one-off or develops into something more.