Whenever gold tries to move up, the market starts doubting its behaviour. The gold price did manage to end the past week above $1200 mark.
Gold prices rose on Friday following a monthly U.S. employment report falling to its lowest level in a year.
Spot gold rose 0.3 percent at $1,202.40 an ounce. It had gained 0.6 percent so far for the week, on track to mark its biggest weekly gain in six.
Data coming in from the US was responsible for this positive trend in the yellow metal-
But the question once again was how far will it stay here? Will it move forward or once again it will turn down to its low of $1183?
Despite the weekly gain, gold prices have fallen more than 12 percent from a peak in April largely due to strength in the dollar, which has benefited from a vibrant U.S. economy, rising U.S. interest rates and fears of a global trade war.
The fear is that the rising dollar is going to cause a huge rout in the emerging markets and investors want to hedge that risk
Recently gold has been hovering between $1190 and $1210, not being able to cross these marks – neither upside nor downside.
The reason being- if there are 2 drivers for gold prices then on the other hand you would find 4 more factors are that ready to pull it down.
Currently some short term influencers are making it difficult for gold to amend its behaviors.
One of the strongest influencers for gold as of now is the US dollar and the US economy which are totally relative to each other.
Dollar has remained strong for quite some time. The US economy is also believed to be moving gradually on a positive growth path, which has further initiated the Fed to raise its interest rates in December. Moreover, it’s expected to bring in few more hikes in 2019 too.
What further raises interest is that the current trade war between US and Chine is acting positive for the US economy?
There has also been some settlement in terms of the rehashing of NAFTA as the USMCA (U.S., Mexico, and Canada Agreement which promises trade stability between the three North American nations, although when the small print is examined in detail it may leave the participants unhappy with the likely outcome.
Gold ETF saw huge withdrawals and equities markets displayed new records. All these clubbed together has been a big reason behind gold’s current behaviors. Even in this wary situation, some players are still holding positive sentiments for gold.
And one of the main reasons for this is central banks. Central banks across the world are hoarding gold amid growing fears about global volatility and a possible downturn for financial markets.
They have snapped up almost 275 tons of gold this year alone – 8 per cent ahead of 2017 – at a cost of more than £13 billion.
Many national banks have been returning to the market for the first time in years. India bought eight tons, its first purchase since 2009
Furthermore, if funds start moving back to the ETFs that would be a good sign that we could be at a turning point.
Gold believers have a strong faith in this safe haven asset and are waiting for it to rise in the long term as there are many positive things waiting to occur which will create a constructive impact on the yellow metal.
• U.S. total debt and monthly deficit seems to be accelerating
• Central bank gold buying appears to be increasing;
• The dollar may be in the process of being downgraded as the world’s reserve
• And precious metals demand appears to be rising in the key Asian and Middle Eastern markets
So gold is being pulled between the bears and the bulls of the short term and long term futures.
Much of the volatility will depend on the dollar and in case the dollar starts losing its global presence then gold price in the dollar terms is expected to rise,
Not forgetting the other geopolitical factors. Gold investors are very much positive for gold in the long run and believe that though it will hover around the $1200 mark for the time being, but will soon rise.
Gold prices rose on Friday following a monthly U.S. employment report falling to its lowest level in a year.
Spot gold rose 0.3 percent at $1,202.40 an ounce. It had gained 0.6 percent so far for the week, on track to mark its biggest weekly gain in six.
Data coming in from the US was responsible for this positive trend in the yellow metal-
- Non farm payrolls rose just 134,000, well below Refinitiv estimates of 185,000 and the worst performance since September 2017 when a labor strike weighed on the numbers.
- The unemployment rate fell two-tenths of a percentage point to 3.7 percent, the lowest since December 1969 and one-tenth of a percentage point below expectations.
- Augusts’ initial count was revised up dramatically, from 201,000 to 270,000, while July's numbers came up as well, from 147,000 to 165,000.
- The revisions bring the three-month average growth to 190,000 while the 12-month average gain is 201,000.
But the question once again was how far will it stay here? Will it move forward or once again it will turn down to its low of $1183?
Despite the weekly gain, gold prices have fallen more than 12 percent from a peak in April largely due to strength in the dollar, which has benefited from a vibrant U.S. economy, rising U.S. interest rates and fears of a global trade war.
The fear is that the rising dollar is going to cause a huge rout in the emerging markets and investors want to hedge that risk
Recently gold has been hovering between $1190 and $1210, not being able to cross these marks – neither upside nor downside.
The reason being- if there are 2 drivers for gold prices then on the other hand you would find 4 more factors are that ready to pull it down.
Currently some short term influencers are making it difficult for gold to amend its behaviors.
One of the strongest influencers for gold as of now is the US dollar and the US economy which are totally relative to each other.
Dollar has remained strong for quite some time. The US economy is also believed to be moving gradually on a positive growth path, which has further initiated the Fed to raise its interest rates in December. Moreover, it’s expected to bring in few more hikes in 2019 too.
What further raises interest is that the current trade war between US and Chine is acting positive for the US economy?
There has also been some settlement in terms of the rehashing of NAFTA as the USMCA (U.S., Mexico, and Canada Agreement which promises trade stability between the three North American nations, although when the small print is examined in detail it may leave the participants unhappy with the likely outcome.
Gold ETF saw huge withdrawals and equities markets displayed new records. All these clubbed together has been a big reason behind gold’s current behaviors. Even in this wary situation, some players are still holding positive sentiments for gold.
And one of the main reasons for this is central banks. Central banks across the world are hoarding gold amid growing fears about global volatility and a possible downturn for financial markets.
They have snapped up almost 275 tons of gold this year alone – 8 per cent ahead of 2017 – at a cost of more than £13 billion.
Many national banks have been returning to the market for the first time in years. India bought eight tons, its first purchase since 2009
Furthermore, if funds start moving back to the ETFs that would be a good sign that we could be at a turning point.
Gold believers have a strong faith in this safe haven asset and are waiting for it to rise in the long term as there are many positive things waiting to occur which will create a constructive impact on the yellow metal.
• U.S. total debt and monthly deficit seems to be accelerating
• Central bank gold buying appears to be increasing;
• The dollar may be in the process of being downgraded as the world’s reserve
• And precious metals demand appears to be rising in the key Asian and Middle Eastern markets
So gold is being pulled between the bears and the bulls of the short term and long term futures.
Much of the volatility will depend on the dollar and in case the dollar starts losing its global presence then gold price in the dollar terms is expected to rise,
Not forgetting the other geopolitical factors. Gold investors are very much positive for gold in the long run and believe that though it will hover around the $1200 mark for the time being, but will soon rise.
