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Gold Weakens But Safe Haven Appeal Still in Focus

Gold Weakens But Safe Haven Appeal Still in Focus

kinesis money

Gold prices are trading somewhat steady after having climbed to a two-week high during the previous trading session over rising concerns of the spread of the coronavirus across and beyond China. At the time of writing, GOLD is trading at a little above $1,551.

The safe haven appeal of gold was boosted by rising fears of an outbreak of coronavirus, which has spread across major Chinese cities like Beijing and Shanghai. With the upcoming Chinese New Year holidays which would see significantly higher travel in and out of China, markets are concerned that the epidemic could spread more rapidly, affecting more people across China and other countries and possibly even impact economic growth.

Gold prices also remain supported after rockets struck inside Baghdad’s Green Zone, a safe area where government buildings and foreign missions are located. In addition, the precious metal received additional bids after the IMF downgraded global economic growth forecasts for 2020 and 2021.

In addition to upcoming economic data releases, gold can be further impacted by latest developments at the World Economic Forum in Davos, Switzerland. Special focus will stay on the issue of international trade when world leaders converge to set the agenda for the upcoming year.

 

Posted Wednesday, January 22, 2020 by Arslan Butt

Gold Price Eyes Monthly High as RSI Continues to Track Upward Trend

Gold Price Eyes Monthly High as RSI Continues to Track Upward Trend

GOLD PRICE TALKING POINTS

The price of gold extends the advance from the previous week even though the US and France settle on a trade truce, and the precious metal may continue to exhibit a bullish behavior as the Relative Strength Index (RSI) tracks the upward trend from December.

GOLD PRICE EYES MONTHLY HIGH AS RSI CONTINUES TO TRACK UPWARD TREND

The price of gold retraces the decline from the monthly high ($1611) despite the narrowing threat of a global trade war, and the weakening outlook for the world economy may keep the precious metal afloat as the International Monetary Fund (IMF) trims its growth forecast for 2020.

The IMF warns that downside risks “remain prominent” amid the ongoing shift in US trade policy, with the agency going onto say that “the 2019 global growth estimate and 2020 projection would have been 0.5 percentage point lower in each year without monetary stimulus.”

It remains to be seen if the Federal Reserve will continue to insulate the US economy as French President Emmanuel Macron pledges to work with the Trump administration “on a good agreement to avoid tariff escalation,” and the development may keep the Federal Open Market Committee (FOMC) on the sidelines as “participants regarded the current stance of monetary policy as likely to remain appropriate for a time.”

In fact, Fed Fund futures reflect a greater than 80% probability the FOMC will keep the benchmark interest rate in the current threshold of 1.50% to 1.75% on January 29, and the FOMC may largely endorse a wait-and-see approach for monetary policy as “a number of participants observed that the domestic economy was showing resilience in the face of headwinds from global developments.”

However, the FOMC may come under pressure to implement lower interest rates as the Trump administration remains reluctant to rollback tariffs, and Chairman Jerome Powell and Co. may end up adjusting the forward guidance when Fed officials update the Summary of Economic (SEP) at the next quarterly meeting in March amid the weakening outlook for the world economy.

In turn, the weakening outlook for global growth paired with speculation for lower interest may keep gold prices afloat as market participants look for an alternative to fiat-currencies.

With that said, the broader outlook for the price of gold remains constructive, with the reaction to the former-resistance zone around $1447 (38.2% expansion) to $1457 (100% expansion) helping to rule out the threat of a Head-and-Shoulders formation as the region acts as support.

GOLD PRICE DAILY CHART

 

David Song, Currency Strategist

Gold price today – Yellow metal trades lower amid volatility but may move above Rs 40K soon

Gold price today – Yellow metal trades lower amid volatility, but may move above Rs 40K soon

Pritam Patnaik of Reliance Securities advised buying gold February in the range of Rs 39,900-39,850 with a stoploss at Rs 39,790 and target of Rs 40,100 levels.

 

kinesis money

1. USA | The largest economy in the world has the most gold, nearly double of Germany, at 8,133.5 tonnes.

Gold futures traded lower amid volatility in the morning on January 20, after rallying more than a percent in previous three trading sessions on the hope of improving consumer demand following the phase one trade deal signed between the United States and China.

The February gold futures contract was trading at Rs 39,890 per 10 gram on the MCX, down Rs 56 or 0.14 percent, at 0905 hours IST. It closed at Rs 39,946 on January 17, after rising 1.26 percent in three consecutive sessions.

Experts expect prices to cross psychological Rs 40,000 mark soon as it continued to hold its support levels.

"MCX Gold February have well sustained above Rs 39,700 levels which indicates positivity. On a daily chart, gold has sustain above 21-daily moving average which is placed at Rs 39,360 levels which will act strong support to the counter," Pritam Patnaik of Reliance Securities told Moneycontrol.

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On the hourly chart it has given a positive crossover of 50*100 hourly moving average which is a positive crossover, he added.

He advised buying gold February in the range of Rs 39,900-39,850 with a stop loss at Rs 39,790 and target of Rs 40,100 levels.

Manoj Kumar Jain of IndiaNivesh Commodities also feels if the gold sustains above Rs 39,800, then it could test Rs 40,050-40,200 levels.

In the international, gold prices traded at $1,558.50 per troy ounce, down 0.11 percent as strong US economic data is likely to increase demand for riskier assets, hence there could be less demand for safe haven.

"International gold has sustained above $1,550 levels which will hold as support & upside $1,563 will act a strong resistance. It may trade in $1,550-$1,562 range. Break above $1,563 will take prices towards $1,575 levels," Pritam said.

Gold and silver prices rebound on Friday in the international market. Prices gained for the second day in a row and spot gold closed above $1,550 per troy ounce and silver prices closed above $18 per troy ounce. Both precious metals gained after mixed setup numbers from the US and other economies on Friday.

Prices also get support on the hope of rising consumer demand after signing first phase trade deal between US-china.

"We expect both the precious metals to remain range-bound and will continue to get support at lower levels. Gold prices sustain above $1,550 could test resistance level of $1,564-1,572 while $1,542 act as a major support in the international market," Manoj Kumar Jain, Director, IndiaNivesh Commodities told Moneycontrol.

MCX silver February futures traded at Rs 46,621 per kg, down Rs 135 or 0.29 percent at 0905 hours IST. It closed at Rs 46,756 on Friday, up 1.86 percent in previous three days.

"Silver prices are expected to hold support levels of Rs 46,400 and if it sustains above Rs 46,850 then it could test Rs 47,100-47,400 levels again," said Manoj Kumar Jain.

According to him, in the international market, silver prices if sustain above $18 per troy ounce then it could test $18.18-18.40 per troy ounce levels. "$17.70 continues to act as major support."

 

Moneycontrol News
@moneycontrol.com

Gold futures gain for the session but end little changed for the week

Gold futures gain for the session, but end little changed for the week

Kinesis money

Palladium futures soar to more record highs

Gold futures moved higher on Friday, but the yellow metal barely budged for the week as stock rallied to all-time highs, helping to undercut some demand for assets perceived as havens.

“Gold has struggled to shine this week as positive economic data from the United States and China cooled concerns over the global economy,” said Lukman Otunuga, senior research analyst at FXTM.

“Appetite towards the metal was also bruised by the ‘phase one’ [U.S.-China] deal, which offered some light at the end of the long trade war tunnel,” he told MarketWatch. “With stock markets hitting record highs and the dollar stabilizing, gold is positioned to weaken in the short term.”

Gold for February delivery GCG20, -0.19% on Comex gained $9.80, or 0.6%, to settle at $1,560.30 an ounce. March silver SIH20, -0.18%, meanwhile, picked up 13.4 cents, or about 0.8%, at $18.073 an ounce.

For the week, gold futures gained about 20 cents higher than last Friday’s settlement, following gains for each of the last three weeks, according to FactSet data. Silver fell about 0.2% for the week.

“The first two months of the year tend to be bullish for gold from a seasonality perspective,” said Adam Koos, president of Libertas Wealth Management Group. However, some traders who pay attention to seasonality may look to take profit come the end of February, he said.

“So far, the market doesn’t seem to care about the Trump impeachment process, but if the Senate ramps things up in the coming weeks, we could see the fear trade step in and push gold prices higher,” Koos added.

Gold prices briefly pared earlier gains after a U.S. housing report came in at its best level in about 13 years. Housing starts and permits jumped 16.9% to an annual rate of 1.608 million units last month, the highest level since 2006. Consumer sentiment index in January, meanwhile, slipped to 99.1 from 99.3 in December.

Bullion prices have managed to hold above a line viewed as support by technical analyst at $1,550, offering a modicum of optimism for gold bulls.

“The gold markets like gold much more than the risk correlation matrixes do for sure. Indeed, there is demand for all thing’s gold, as evidenced in the sturdy bid around $1550/oz,” wrote Stephen Innes, chief Asia market strategist at AxiTrader, in a daily research report.

Traders also digested readings of expansion for China, which showed economic growth picked up in December. However, growth slowed to new multi-decade low of 6.1% in 2019.

Rounding out action on Comex, March copper HGH20, +0.02% settled at $2.8455 a pound, down 0.05% for the session. For the week, prices rose 1.1%.

April platinum PLJ20, +0.23% added 2.4%, to $1,024.80 an ounce, with prices up 3.9% for the week, while March palladium PAH20, +1.15% notched a fresh record high, up 2.2% to settle at $2,224.90 an ounce, tallying a weekly climb of more than 7%.

“Given a sea of green in global equity markets, mostly positive Chinese economic data (retail sales were strong enough to consider the data positive) and increased media coverage on the stellar gains” in the platinum group metals markets, the bull camp for palladium looks to have a fundamental edge, analysts at Zaner Metals said in a daily note.

 

By

MYRA
P. SAEFONG
MARKETS/COMMODITIES REPORTER
Published: Jan 17, 2020 2:02 p.m. ET

Domestic Silver gained 20 in 2019 Will the momentum continue?

Domestic Silver gained 20% in 2019. Will the momentum continue?

Silver always lags behind gold price performance. Historically, gold triggers the initial move in bullion complex and, eventually, silver gains traction.

Silver has caught up with Gold’s momentum and ended the previous year by gaining more than 20 percent. Prices of the precious white metal in the domestic market jumped to a six-year high due to robust overseas prices and weak Indian rupee.

Silver always lags behind gold price performance. Historically, gold triggers the initial move in bullion complex and, eventually, silver gains traction.

The commodity has been under pressure for the past few years due to lacklustre industrial demand and bearish sentiments in the entire metal complex.

 

However, weak global economic outlook and increased geopolitical instability ignited the safe-haven demand of the commodity in 2019.

Low-interest rates, steady Dollar, Brexit tensions and limited mine supply are the other factors that boosted the commodity. At the same time, domestic silver got an additional boost due to the feeble Indian currency.

Policy easing measures taken by various Central banks added to the metal’s strength. US Federal Reserve (Fed) cut its rates two times in 2019 to prop up their economy from the trade war fallout.

Both gold and silver are highly sensitive to interest rate cuts as they lift the opportunity cost of holding non-yielding metals such as bullion.

Brexit uncertainties that have continued for the last three-and-half years raised worries over the growth of the region.

Tensions in the Middle East and the Korean peninsula also raised concerns on a fresh bout of hostility between countries and this has lifted the metal’s safe-haven appeal.

Military operations in northern Syria by Turkey and protests in Hong Kong further dialled back risk appetite in favour of safe-haven assets.

Supply shortage and increased physical and investment demand supported the price. As per data from the Silver Institute, global silver jewellery demand has increased by 4 percent in 2018 while the mine production fell by 2 percent.

As a safe haven investment option, silver-backed ETFs have become attractive for investors. This is due to the low cost compared to other precious metals like gold and the better risk-reward ratio the metal offers.

Looking ahead, the biggest driver of silver prices for the current year will be the industrial and investment demand.

If weak global economic sentiments continue, it will support the metal’s haven demand. However, improved economic optimism can lift the industrial demand of the metal as well.

Fed is unlikely to raise rates in the first half of 2020 and that may keep a cap on the US Dollar. A weak Dollar usually lifts the sentiments of precious commodities.

Mine production is the other key price driver of the commodity. For the last few years, silver production has been on the lower side and the trend is expected to continue in the current year as well.

At the same time, demand from the Indian jewellery sector is likely to be higher as buyers prefer to buy silver as a substitute for gold, which is currently at record highs.

Meanwhile, the performance of Indian Rupee will be critical for domestic silver prices. A weak Rupee will put an additional burden on customers as currency weakness lifts the landed cost of the commodity in the country.

On the price front, MCX rates are likely to be congested inside Rs 43,000-49,000 per kg levels initially, breaking any of the sides would suggest a fresh direction to the commodity. In the international market, $20 will be an important upside obstacle and $14 may act as major support.

 

The author is Head Commodity Research at Geojit Financial Services

Gold prices today rise for third day in a row silver rates up

Gold prices today rise for third day in a row, silver rates up

Gold prices may remain in a range in near term, say analysts

Silver prices also rose today, tracking gold

Gold and silver prices edged higher today in India, tracking muted gains in global markets. February gold futures prices on MCX were up 0.20% to ₹39,761 per 10 gram, extending gains to the third day. Tracking gold, silver also edged higher. On MCX, silver prices rose 0.28% to ₹46,550. Gold may see sideways movement in the near term on mixed fundamentals, says SMC Global in a note.

Gold can dip lower towards ₹39,600 while taking resistance near ₹39,800 while silver can test ₹46,200 while taking resistance near ₹46,700, the brokerage added.

Last week, gold prices in India had hit a record high of ₹41,300 per 10 gram as tensions between US and Iran escalated. But as tensions eased, prices have fallen from highs and have remained sideways in recent sessions.

In global markets, gold prices were flat today, hurt by higher appetite for riskier assets. Positive US retail data and optimism over a partial US-China trade deal lifted global equity markets. Data released today showed China's GDP growth last year was in line with estimates. Gold added 0.1% to $1,553.87 an ounce. The holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.13% to 879.49 tonnes on Thursday.

Holdings of the world's largest gold-backed exchange traded fund SPDR Gold Trust GLD rose 0.13% to 879.49 tonnes on Thursday.

Despite the signing of the US-China interim trade deal, "still many issues are not addressed in this deal, which was responsible for a slowdown in the global economy. Gold found support over this," said Abhishek Bansal, chairman of ABans Group of Companies.

Despite the signing of the interim trade pact between US and China, many analysts say that lower-for-longer interest rates, a weaker dollar and the US presidential election will provide multiple catalysts for gains in gold prices.

Gold prices had jumped 25% in India last year amid a global rally, triggered by US-China trade friction, weaker rupee and a hike in import duty. (With Agency Inputs)

 

Edited By Surajit Dasgupta
Updated: 17 Jan 2020, 11:21 AM IST

Gold prices rise after 2-day skid as US and China make Phase 1 trade deal official

Gold prices rise after 2-day skid as U.S. and China make Phase 1 trade deal official

Kinesis money, Kinesis 500

Gold futures marked their first gain in three sessions Wednesday, as U.S. benchmark stock indexes eased back from the day’s high following the official signing of the U.S.-China Phase 1 trade pact, and the U.S. House of Representatives’ vote to send articles of impeachment of President Donald Trump to the Senate.

As gold prices settled, the S&P 500 index SPX, +0.19% pulled back from its high and that appeared to “have given gold a further lift,” said Michael Armbruster, managing partner at Altavest.

“With the S&P 500 looking expensive at current levels, and the [Federal Reserve] continuing to add liquidity, it makes sense that investors would look to diversify into gold,” he said.

He expects gold to rally back above $1,600 in the months ahead.

On Wednesday, gold for February delivery GCG20, +0.12% on Comex rose $9.40, or 0.6%, to settle at $1,554 an ounce, after declining for a two straight sessions. Prices extended their gains into the electronic trading session, to stand at $1,555.80 shortly after the release of the Fed’s Beige Book, which said economic activity continued to expand “modestly” over the last six weeks of 2019.

March silver SIH20, -0.29% picked up 24.6 cents, or 1.4%, at $17.988 an ounce, after shedding 1.4% on Tuesday. March copper HGH20, -0.31%, meanwhile, edged down by less than a cent, or 0.3%, to $2.866 a pound.

Part of the recovery in gold prices is likely “the result of news that the US will leave tariffs in place until the US has proof of compliance with the Phase 1 agreement,” possibly after the November U.S. presidential election, analysts at Zaner Metals wrote in a daily report Wednesday.

According to the Wall Street Journal, the first phase of the trade deal will include roughly $200 billion in Chinese purchases of American goods and services over the next two years. However, tariffs on some $360 billion of annual Chinese goods will remain in place, with reports by Bloomberg News of that development on Tuesday causing the U.S. equity market to trim strong gains and some benchmark stock indexes to turn negative.

For now, “gold prices have retraced overbought levels and are finding a more stable footing around the mid-$1500s for the time being, with investors eager for details surrounding the expected rollback in tariffs,” wrote Han Tan, market analyst at FXTM, in a daily research note.

U.S. Treasury Secretary Steven Mnuchin during an interview on CNBC Wednesday morning said that additional rollbacks of tariffs on China goods are expected in the second phase of the trade talks but didn’t specify.

Looking ahead, the World Gold Council said in a report issued Wednesday that the “interplay between market risk and economic growth,” particularly financial uncertainty and lower interest rates, as well as weakening global economic growth and gold price volatility, will drive gold demand this year. Net gold purchases by central banks, meanwhile, will likely “remain robust.”

Also on Comex Wednesday, platinum futures settled above $1,000 an ounce for the first time since 2018 and palladium futures notched another record finish.

April platinum PLJ20, -0.21% tacked on $38.30, or 3.9%, to $1,025.60 an ounce and March palladium PAH20, +0.92% rallied by $41.80, or 2%, to $2,165.10 an ounce.

“While the palladium market did not immediately launch higher following strong Chinese import export news, it ultimately forged another new all-time high,” said analysts at Zaner Metals. China’s exports rose 5% in 2019 from a year earlier in yuan terms, according to official data released on Tuesday.

“It should also be noted that platinum prices have now forged a breakout up overnight and have reached the highest level since February of 2018 and that suggests the market has finally caught lift from palladium,” the Zaner analysts added.

 

MYRA P SAEFONG
MARKETS/COMMODITIES REPORTER
Published: Jan 15, 2020 2:15 p.m. ET

Gold prices rise today after two-day fall silver rates jump

Gold prices rise today after two-day fall, silver rates jump

Gold prices in India are still down about ₹1,600 per 10 gram in about a week

Gold rates hit a record high last week

Gold and silver prices rose today in Indian markets, snapping their recent declining streak. On MCX, gold futures rose 0.63% to ₹39,695 per 10 gram, after declining over in the past two days. Silver also followed a similar trend. On MCX, silver futures rose 0.82% to ₹46,278. Gold had surged to record high of ₹41,300 per 10 gram in the previous week and as US-Iran tensions subsided rates in domestic markets came off the highs.

"A week ago Iran-US news caused a pretty significant rally in gold; and now that has subsided." SMC Global said in a note.

Back in India, the government has mandated jewellers to sell only hallmarked jewellery and artefacts made of 14, 18 and 22 carat gold from today. Jewellers have been given one year time to register with the Bureau of Indian Standards (BIS) and implement the mandatory hallmarking of gold jewellery.

Gold prices rose on Wednesday as investors sought safer assets amid uncertainty about the effectiveness of the U.S.-China Phase 1 trade deal after a top U.S. official said tariffs on Chinese goods would stay in place even after the agreement is signed.

Investors remained cautious ahead of US-China Phase 1 trade deal signing later today. Just a day before the world's top two economies prepared to sign a Phase 1 trade deal, US Treasury Secretary Steven Mnuchin said tariffs on Chinese goods will be in place until the completion of a Phase 2 agreement. This uncertainty helped boost the safe-haven appeal of gold. Spot gold, in global markets, rebounded 0.3% to $1,551.38 per ounce.

Analysts say that concerns of trade friction in US-China ties still remain and this will provide support to gold on the lower side. "I struggle to see gold trading below $1,500 for a sustainable period of time, over the next year or so, largely as a result of this trade uncertainty," Reuters quotes a ING analyst as saying.

Last year, gold prices rose 25% in India and 18% in global markets as US-China trade friction spurred concerns over global economy.

"Gold fell sharply in last few days as US-Iran toned down threats against each other reducing expectations of a major escalation of tensions in the Middle-east. US-China trade deal optimism also reduced gold’s safe haven allure. Price however stabilized today as market players position for signing of US-China trade deal today. The phase 1 of trade deal is set to be signed today however there is uncertainty about terms of the deal as well as timeline for future talks," Kotak Securities said in a note.

Among other precious metals, silver prices rose 0.3% to $17.83 per ounce, while platinum advanced 0.6% to $989.03.

 

Edited By Surajit Dasgupta
Updated: 15 Jan 2020, 10:35 AM IST

Gold logs lowest finish since the start of the year as risk-on sentiment prevails

Gold logs lowest finish since the start of the year as risk-on sentiment prevails

Gold prices on Monday marked their lowest finish since the first full trading day of the year, finding little haven-related interest as appetite for riskier assets lifts global equities, the U.S. dollar strengthened against the Japanese yen, and bond yields climbed.

“Upbeat trader and investor attitudes” worked against the precious metals markets to start the trading week, said Jim Wyckoff, senior analyst at Kitco.com, in a daily note.

“The U.S.-Iran conflicted has, at least for the time being, died down and the U.S. and China are this week set to sign a partial trade deal, which is likely to stimulate global economic growth in 2020,” he said. However, “the marketplace is keeping an eye on major protesting in Iran following the admission from the Iranian government that its military mistakenly shot down a passenger airliner last week.”

Against that backdrop, gold for February delivery GCG20, -0.72% on Comex fell $9.50, or 0.6%, to settle at $1,550.60 an ounce. That was the lowest finish for a most-active contract since Jan.2, FactSet data show. March silver SIH20, -1.12% lost 10.9 cents, or 0.6%, to $17.996 an ounce.

The U.S. dollar versus the Japanese yen rose 0.4% to trade at 109.918 USDJPY, +0.13% after hitting its highest level against the Japanese currency since late May. A stronger dollar is often seen as a negative for gold and other commodities priced in the unit, making them more expensive to users of other currencies. In addition, the Japanese yen is also seen as arguably the biggest beneficiary of haven flows during bouts of geopolitical uncertainty.

“If the price action on this pair is anything to go by then gold could head in the opposite direction as demand for safe-haven assets drop back with the U.S.-Iran tensions easing,” said Fawad Razaqzada, market analyst at Forex.com, in a note.

“Indeed, gold and the USD/JPY tend to have a strong negative correlation with one another. Gold bugs better hope then that either the negative correlation breaks down or the breakout in the USD/JPY turns out to be a fake one,” he said.

In other metals trading, March copper HGH20, -0.23% rose 1.7% to $2.861 a pound.

April platinum PLJ20, -0.83% fell 0.4% to $982.10 an ounce, while March palladium PAH20, +0.08% edged up by 0.3% at $2,079.10 an ounce. Prices for palladium shook off some earlier weakness to notch another record high.

“The path of least resistance remains up in the palladium market, with general optimism into the US/Chinese trade deal signing likely setting the stage for further new all-time highs,” said analysts at Zaner Metals in a daily note.

 

MYRA
P. SAEFONG
MARKETS/COMMODITIES REPORTER
Published: Jan 13, 2020 2:20 p.m. ET

Don’t panic about Iran but don’t sell your gold either

Don’t panic about Iran – but don’t sell your gold either

“Gold has had one of its more excitable runs since the start of the year. It surged so much in the wake of the Iran airstrikes that it even drew the attention of the broadsheet financial press. So naturally, the price was bound to tank shortly afterwards. Which is precisely what happened this morning. If you’re a gold investor, you might be fretting that gold’s high point for 2020 has already come and gone. I wouldn’t worry.”

USAGOLD note: We mentioned this insightful opinion piece from MoneyWeek’s John Stepek in yesterday’s DMR. We revisit it here for those who might have missed it. Stepek offers some helpful perspective on the gold market’s volatility over the past several days then takes an in-depth look at why “there should always be a bit of it in your portfolio.

 

MoneyWeek/John Stepek/1-9-2020

Posted on January 10, 2020 by Opinion