Some clear drivers for Gold

A lack of clear drivers has kept gold prices between $1,265 and $1,300 an ounce throughout November, its narrowest monthly range in 12 years. Despite the volatility overnight, it was another subdued session across the precious complex in Asia, with gold struggling above $1,285 an ounce consistently.

The dollar was firm after Wednesday’s uplift on third-quarter U.S. economic growth revised upwards to 3.3 percent, making dollar-priced gold costlier for non-U.S. investors.

Global equities were on course to finish November with a 13th consecutive monthly gain, though a dive in U.S. tech stocks left investors wondering whether the longest global equity bull run in living memory might be starting to splutter.

Also denting investor optimism and signalling underlying support for gold going forward, investors were growing wary about the staggered progress of U.S. tax reform legislation.

Gold drew a certain degree of support in early Asian-Pacific trading from the most recent North Korean missile test, even though the yellow metal did not charge ahead on the latest geopolitical threat, said MKS (Switzerland) S.A.

North Korea said it now has a missile capable of striking the U.S. Wednesday's Asian session adhered to the recent range-bound status quo, however, afternoon headlines out of North Korea did give price action a modest boost.

The latest advances in missile technology in North Korea should provide an underlying bid tone for bullion, with the threat of a potential strike on the U.S. mainland increasing (albeit largely theoretical).

In recent times, such geopolitical tensions have resulted in only short-term price buoyancy and without further headlines to drive interest; participants will turn focus to the upcoming U.S.

Gold prices were down on Wednesday over a statement released by US Federal Reserve chair woman Janet Yellen that economic growth was broad based. This seemed to have convinced investors that rates would go higher soon.

This sentiment was further backed by a strong US economic data which strengthened the dollar further. In response the dollar pushed to a one week high of 93.44 late on Wednesday which further weakened the demand for the yellow metal.  Indeed, spot gold prices fell to $1281.75 per ounce on Wednesday, the lowest since November 23.

How ever amidst geopolitical tension, gold once again regained its safe have status. Reports that North Korea had fired a missile last week, lent support to gold and it moved slightly up in early trading on Thursday. Gold prices have been up and down due to a battle between the positive outlook on a US interest rate and concerns over North Korea firing a missile again.

By Thursday, gold prices were strengthened over a weak US dollar. Moreover, Gold was seen spiking as stocks and the dollar sank after headline reports from ABC that Michael Flynn promised "full cooperation to the Mueller team" and is prepared to testify that as a candidate, Donald Trump "directed him to make contact with the Russians."

Gold and U.S. Treasury prices have rallied to their session highs in late-morning action Friday, with T-Bonds and T-Notes futures posting strong gains, on news reports that former Trump  Administration national security adviser Michael Flynn is set to cooperate with the special prosecutor overseeing the probe of Russian tampering with the U.S. presidential election.

Traders were extrapolating this news to potentially mean that President Trump may be in very serious trouble, if he did indeed collaborate with the Russians on the U.S. election tampering. The U.S. stock market quickly sold off on this news, which also helped to lift safe-haven gold.

A follow-through USD weakness, coupled with a notable slowdown in China's manufacturing activity, as reported by a private survey, was seen lending some additional support to the precious metal.

Despite the supporting factors, resilient US bond yields continued exerting some downward pressure and kept a lid on any meaningful up-move for the yellow metal

Gold caught between Rally and Rebounce

Gold headed for a weekly decline as we saw prices dropping over strengthening U.S dollar.

Gold prices nudged lower on Thursday, with investors taking profits after gains of nearly 1 percent in the previous session on weaker U.S. economic data and concerns among some Federal Reserve policymakers over lower inflation.

Gold had surged higher on Wednesday, buoyed by the US Federal Reserve’s (Fed) concerns about persistent low inflation which saw the dollar slide.

The dollar suffered its biggest drop in five months on Wednesday after minutes from the U.S. Federal Reserve's showed"many participants" were concerned inflation would stay below the bank's 2 percent target for longer than expected.     

The greenback was still nursing losses on Thursday,supporting dollar-priced gold by making it cheaper for non-U.S.investors.

Spot gold was 0.1 percent lower at $1,290.82 perounce by 1313 GMT on Thursday. Gold still needs that one boost to achieve a support price of $1325 an ounce.

Trading was lighter than usual on Thursday, with Japanese financial markets shut for a public holiday while U.S. markets would be closed for the Thanksgiving holiday.

In wider markets, Chinese stocks suffered their biggest fall in almost two years, weighing on global equities, denting risk appetite and providing underlying support for gold, seen as a safe haven asset.           

With Chinese stocks down, low yielding currencies such asthe Japanese yen and the Swiss franc remained firmly supportedagainst the dollar.

Earlier in the week, Fed Chair Janet Yellen stuck by herprediction that U.S. inflation would soon rebound, but offeredan unusually strong caveat that she was "very uncertain" aboutthis and open to the possibility that prices could remain lowfor years to come.

After nearly a decade of pumping up the US and global markets, Janet Yellen and team are now starting to show some concern for financial market prices. The FOMC is concerned that they are getting out of hand and are a danger to the US economy.

The minutes of the Fed’s October meeting show that the committee is largely optimistic about the US economy:

“In their discussion of the economic situation and the outlook, meeting participants agreed that information received since the FOMC met in September indicated that the labor market had continued to strengthen and that economic activity had been rising at a solid rate despite hurricane-related disruptions.”

Currently the yellow metal is caught in the middle strong influential factors leaving markets perplexed over a rally or rebound in its movements.

Gold, silver and platinum prices have found bases and look set to remain range bound for now. The lack of any immediate geopolitical tension over North Korea has reduced the need for haven demand. With equities still generally upbeat, the opportunity cost of holding bullion is high, but the fact precious metals prices are not trending lower given the strength in equities is noteworthy. The weaker dollar should help underpin firmer precious metals prices.

Financial history revels that majorly investors would see to traditional financial systems to gain complete benefit of uncertainties. That would show through in traditional assets like shares and fixed income with benefit shifting to those markets that are not perceived to depend on the sanctity of governments and corporations that are prone to excess and can readily find their correlation surge ‘to one’ in the event of heavy market movement.

 This talking point seems to be born out of the skepticism that has arisen through the excessive stimulus and maintenance of extremely low interest rates by the world’s largest central banks.

Gold would also be sympathetic to such a view as the historic, accessible and regulated alternative asset. I think the lack of relationship is due to the premise of the theme rather than a systemic change in Gold’s nature. Either way, we will see this contrast resolved in the weeks ahead.