Post by gallito on Dec 2, 2015 15:25:23 GMT -5
Metal is in the thrall of a dominant dollar, which touched a 12-year high yesterday
Having dropped to an intraday $1,052 an ounce and settled at $1,054 on Friday – the lowest level since the $1,045 reached in February 2010 – gold rose in New York on Monday to $1,064 an ounce.
It added to gains overnight and at one point touched $1,074, though it has softened slightly in the hours since.
Gold and other dollar-denominated commodities are currently being pulled hither and thither by the fluctuations in the US currency, which touched a near 13-year high before falling back.
While the US dollar remains strong – the Financial Times points out it remains just 0.4 per cent below its 12-year high from March – the amount of money that has been bet on a negative move in gold meant there was some rapid 'covering' of positions as the trend turned, pushing the price markedly higher. There is, though, still a big wager in place that the gold price will fall.
Reuters says data from the Commodity Futures Trading Commission show hedge funds and money managers raised their net short position in gold (bets the price will fall) to the biggest on record last week.
"Assets in SPDR Gold Trust, the world's top gold-backed exchange-traded fund, are at their lowest since September 2008," says Reuters. Gold recorded its biggest monthly drop since March 2013 in November.
All of this suggests that any rise might be a short-lived 'relief rally' and that prices will fall back. This would most probably happen after the release on Friday of a key jobs report, which will give a strong indication on whether the Federal Reserve will, as expected, raise rates in two weeks' time.
As rates rise tends to prompt falls in non-yielding commodities relative to income-generating assets. It will also give a further leg-up to the dollar, which would increase the expense of buying for overseas investors.
Against this is the simple fact that, despite rates-rise speculation reaching fever pitch, the gold price is showing resilience. That it is being moved more by the dollar trend could mean that the rates rise itself has been priced in – and Reuters suggests that if it holds out above $1,070 after Friday then it could be set to move higher.
Whether gold could hold these gains in the face of a first shift in rates policy for seven years, should it happen later this month, is another question.
www.theweek.co.uk/gold-price/61682/gold-price-can-resistance-hold-ahead-of-fed-meeting
Having dropped to an intraday $1,052 an ounce and settled at $1,054 on Friday – the lowest level since the $1,045 reached in February 2010 – gold rose in New York on Monday to $1,064 an ounce.
It added to gains overnight and at one point touched $1,074, though it has softened slightly in the hours since.
Gold and other dollar-denominated commodities are currently being pulled hither and thither by the fluctuations in the US currency, which touched a near 13-year high before falling back.
While the US dollar remains strong – the Financial Times points out it remains just 0.4 per cent below its 12-year high from March – the amount of money that has been bet on a negative move in gold meant there was some rapid 'covering' of positions as the trend turned, pushing the price markedly higher. There is, though, still a big wager in place that the gold price will fall.
Reuters says data from the Commodity Futures Trading Commission show hedge funds and money managers raised their net short position in gold (bets the price will fall) to the biggest on record last week.
"Assets in SPDR Gold Trust, the world's top gold-backed exchange-traded fund, are at their lowest since September 2008," says Reuters. Gold recorded its biggest monthly drop since March 2013 in November.
All of this suggests that any rise might be a short-lived 'relief rally' and that prices will fall back. This would most probably happen after the release on Friday of a key jobs report, which will give a strong indication on whether the Federal Reserve will, as expected, raise rates in two weeks' time.
As rates rise tends to prompt falls in non-yielding commodities relative to income-generating assets. It will also give a further leg-up to the dollar, which would increase the expense of buying for overseas investors.
Against this is the simple fact that, despite rates-rise speculation reaching fever pitch, the gold price is showing resilience. That it is being moved more by the dollar trend could mean that the rates rise itself has been priced in – and Reuters suggests that if it holds out above $1,070 after Friday then it could be set to move higher.
Whether gold could hold these gains in the face of a first shift in rates policy for seven years, should it happen later this month, is another question.
www.theweek.co.uk/gold-price/61682/gold-price-can-resistance-hold-ahead-of-fed-meeting