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11/09/17

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(Kitco News) - Gold’s major headwinds seem to have been priced into the market and that’s why one analyst says the metal is setting itself up for a year-end breakout.
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Looking at both gold and SPDR Gold Shares (GLD) prices, Albright Investment Group’s founder Victor Dergunov says even the technical picture is looking bright for the yellow metal.
“We see a clear uptrend that materialized in late 2016, there is a series of higher highs and higher lows, and recently, we can see that GLD appears to have made a double bottom at the $120 level. The ETF hit $120 in early October, bounced, came back, retested it, consolidated, and now appears poised to move higher,” he noted in a recent Seeking Alpha post.
Fundamentals are also tipping in gold’s favor, he continued, noting that rising inflation, a weaker U.S. dollar, relatively low interest rates and the possibility of geopolitical and economic instability are all in the cards.
“These instrumental underlying factors seem to be aligning beautifully with an extremely favorable technical image as well, leading me to the conclusion that GLD/gold prices are significantly undervalued and are likely to retest this year’s highs before ultimately proceeding higher into year-end,” he said.
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“The new trading range for GLD, which I anticipate will be reached early in 2018 is expected to be between $128 and $137, which coincides with roughly $1,350 and $1,450 in gold.”
Despite recent pressure, the gold market moved higher Thursday. 
December Comex gold futures settled the day 0.3% higher at $1,287.50 an ounce while GLD last traded at $122.17, up 0.44% on the day.
Looking at each fundamental factor more closely, Dergunov suggested that the U.S. dollar and U.S. stock markets, which have both been stealing away investors from the gold market, seem ready to reverse.
“Although the buck has mustered an impressive counter-rally of nearly 5% over the last two months, it is unlikely that this upward momentum will be sustainable over the long term,” he wrote. “Inflationary pressures are likely to be overpowering for the fragile currency, and are likely to push the buck back down going forward. This will undoubtedly serve as an additional favorable tailwind for the yellow metal.”
As for the Federal Reserve’s December rate hike, it is already baked into the gold price, and so the metal has little “downside risk” moving forward, said Dergunov.
“The market is not expecting another rate increase until June 2018, giving gold an increase-free interest rate environment going all the way out to mid 2018,” he added.
The metal will also likely remain floored by safe-haven demand.
“There are plenty of tense geopolitical hotspots around the world right now, not least of which are North Korea, Saudi Arabia, Syria, and Iran,” he said. “Fears of a military conflict with N.K. have subsided in recent months; however, they can’t be ruled out altogether, as the rogue regime continues its nuclear ambitions in the face of international outrage and condemnation. The Middle East is another explosive area in the world.”
By Sarah Benali
For Kitco News

Gold prices

(Kitco News) - Gold prices are bouncing around unchanged levels, seeing little reaction after the U.S. economy created more jobs than expected.
Friday, the Bureau of Labor Statistics said 211,000 jobs were created in April, economists were expecting to see job gains of 194,000.  The stronger-than-expected report comes after last month’s disappointing jobs growth.
At the same time the unemployment rate came in at 4.4%, down from last month’s rate of 4.5% and better than economists were expecting.
While the headline number was slightly better than expected, revision showed net losses in the last two months. March employment was revised down to 79,000 jobs, from its initial report of 98,000 jobs; February’s report was revised up slight to 232,000 jobs from the previous report of 219,000.
According to the report, job gains have averaged 174,000 during the last three months.
Gold prices were modestly positive on the day ahead of the report but have lost ground in initial reaction. June Comex gold last traded at $1.228.60 an ounce, flat on the day.
The mining sector continues to see employment growth with 9,000 jobs created in the sector last month, with the majority in support services. According to the report, the mining sector has created 44,000 jobs since its recent lows from October 2016.
Royce Mendesm, senior economist at CIBC World Markets, said that one of the reason behind the market’s muted reaction could be wage growth. Average hourly earnings increased by 7 cents or 0.3% from the previous month to $26.19. In the last 12 months wages have increased 2.5%.
“The annual rate of wage growth is now at the bottom end of the range its been in since mid-2016, and is notably below the Fed's 3-4% preferred rate,” he said.
However overall, he added that the data is positive enough to give the Federal Reserve room to raise interest rates in June.
By Neils Christensen
For Kitco News

Gold Trades under pressure as an interest rate high remains highly probable

Gold Trades Under Pressure as an Interest Rate Hike Remains Highly Probable
Gary Wagner
Tuesday March 07, 2017 18:29
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Commentaries & Views
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For the last six consecutive days gold prices have moved lower. This is in anticipation of a potential interest rate hike later this month when the Federal Reserve meets on March 14-15. Recent statements made by Federal Reserve members, including chairwoman Janet Yellen, have continued to make a strong case for an interest rate hike being the appropriate action and an outcome of this month’s meeting.

The underlying sentiment from the Fed seems to be that the economic data that Fed members use to aid in their decision has been supportive of an interest rate hike as an appropriate move at this time. Although Fed members, traders, and investors are awaiting the results of Friday’s non-farm payroll jobs report, the current estimate is that there were 190,000 new jobs added in February.
As reported by Reuters today, “The monthly U.S. jobs report, due on Friday, is expected to show an increase of 190,000 jobs, probably enough to push the Fed to raise its base rate again for the second time in four months.”
“The market is taking in stride expectations the Fed will raise rates, unlike past years,” said Rahul Shah, chief executive of Ideal Asset Management in New York.
Technical Levels of Potential Support
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Based on market sentiment, which currently sees an extremely high probability of an interest rate hike this month, gold prices continued to drop dramatically, trading off approximately $10 as of 10:30 EST at 1215.50.
According to our current studies, the next major level of potential support comes in at approximately 1210. This is based upon a Fibonacci retracement harmonics, in which two different time and price cycles contain one primary price point. The first Fibonacci retracement that we use starts at 1124 (the start of the major rally which occurred at the beginning of this year) and concludes at 1264. The second Fibonacci retracement begins at the low found on January 27, at 1180, and also concludes at 1264.
Both retracements contain critical Fibonacci numbers at 1211- 1212, with 1212 being a 38% retracement of the larger Fibonacci study, and 1211 being a 61.8% retracement of the shorter of the two Fibonacci studies. The fact that these different time cycles contain important Fibonacci numbers at the same price tends to increase the strength of the technical study’s result.
For those who would like a deeper analysis, simply use this
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Wishing you as always, good trading,

Could President Elect Donald Trump be Gold's Best Friend?

Could Trump Be Gold’s Best Friend Next Week?
By Neils Christensen of Kitco News
Friday January 13, 2017 13:30

(Kitco News) - Gold could continue to perform well in next week’s shorted trading week as the “Trump effect” loses momentum ahead of President-elect Donald Trump’s inauguration Friday, according to some analysts.
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Gold is preparing to end its third consecutive week of positive gains as the market was driven to a seven-week high, after investors were disappointed that Trump, in his first press conference since his election win, didn’t provide any new information on his economic and fiscal proposals.
February gold futures last traded at $1,195.80 an ounce, up almost 2% since the end of the previous week. Gold is up almost 5.5% since the start of the year.
Silver is also ending its third straight week of positive gains, last trading at $16.775 an ounce, up 1.5% since last week, and up more than 6% since the start of the year.
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“Trump is turning out to be gold’s best friend,” said Ole Hansen, head of commodity strategy at Saxo Bank. “We just don’t know anything about his presidency and that uncertainty is playing into gold’s hands.”
Darin Newsom, senior analyst at Telvent DTN, is also looking for political uncertainty to support gold in the near term as there are still three weeks to go before the next Federal Reserve monetary policy meeting, which is gold’s ultimate driver. He said that in the near-term he could see gold trading between $1,221 an ounce and $1,251 an ounce.
However, with the inauguration not until Friday, some analysts are still watching the U.S. dollar and treasury yields and think that positive economic data could help the greenback and hurt gold.
“Trump or no Trump, the U.S. economy is on solid footing and that will continue to be supportive for the U.S. dollar and push treasury yields higher, said Nick Exarhos, senior economist at CIBC World Markets.
Exarhos added that he will be watching December’s Consumer Price Index, to be released Wednesday. A strong inflation reading could support the Federal Reserve’s outlook for three rate hikes, which would be negative for gold, he said.
Levels To Watch
While gold is starting 2017 on a positive note, analysts note that there is still some work to be done to attract new buyers to the marketplace.
Bill Baruch, senior market analyst at iiTrader said that rising open interest and a massive amount of in-the-money call options in the gold market, could lead to some profit taking in the near-term. He added that he wouldn’t be surprised to see gold take a breather after the last three weeks of gains.
He said that he could see gold test support at $1,175 and a break of that level could lead to a test of $1.165;
“I think any drop in price, would lead to a good entry point to take advantage of a further rally in February,” he said.
Joshua Mahony, market analyst at IG, said that he is watching the $1,177 an ounce level as a drop below this level could increase bearish momentum. He added that he will be neutral on gold unless prices break $1,207.
“Until then, it may be prudent to be thankful for the gains we have seen already over the week and wait for confirmation that $1200 has truly been overcome,” he said.
Hansen added that while short-covering is helping to support prices in the near-term, prices need to push above $1,205 to attract real buyers.
The Final Say
The docket for U.S. economic data, will be a little fuller next week with the main focus on December’s inflation report. However, markets will also receive regional manufacturing data for January. Markets will also receive some U.S. housing data for December.
Central Banks Back From Holidays
While markets have to wait until Feb. 1 for the next Federal Reserve monetary policy announcement, two major central banks will be meeting next week: the Bank of Canada and the European Central Bank.
The ECB carries a little bit more weight because the euro is heavily weighted in the U.S. dollar index, which would have an impact on gold prices. Markets are expecting that ECB President Mario Draghi will strike a dovish tone, which could be euro negative, and in turn weigh on gold.

07/01/2016

Gold Runs Up On More Brexit Ramifications and Dovish Fed
Friday July 01, 2016 17:48
The repercussions from Brexit are far from over. The Bank of England is looking at another round of quantitative easing that may go as high as £250 million (about $330 million). That freer and easier money makes almost any investment attractive, in Great Britain as well as globally.
So, we saw gold, oil and worldwide equities up again today, although in the U.S., probably due to the long Independence Day holiday weekend, trading was muted and the major indexes were struggling to hold their gains.
Gold is up a very strong $17.40 at 3:30PM and silver is once again up a window-shattering amount – 5.40%.

We believe that most of all the BOJ action is a move to protect the City of London’s position as the co-lead star (with New York) in the big financial show. There were some rumblings on this side of the Atlantic in the central banking area, as well.
The Federal Reserve’s usual inter-meeting chatter has begun. Stanley Fischer, Vice Chair of the Board of Governors of the Federal Reserve System, while swatting down the ludicrous notion of negative rates in the U.S., slyly reaffirmed the Fed’s holding to current interest rate levels for the nonce.
Cleveland Fed president Loretta Mester – an FOMC voter – warned that “policymakers cannot let the lack of economic clarity distract us from our important mission,” by which she meant adjusting rates upward, although she said neither the timing nor the data had quite come right yet. Mester is a noted rate hawk.
Another voter on the FOMC, James Bullard, who is president of the St. Louis Fed, said the economy would “need” only one more rate hike this year. Bullard is a mild hawk but he has been viewed as softening his harder-line views of late.
We do have a number of worries that gold bulls, in particular, will find interesting. World manufacturing is in a funk, especially in China. The U.S. is holding its own and is distinctly gaining strength from a cheaper dollar in the last year.
The Caixin survey of manufacturing managers’ sentiment (a private gauge of nationwide factory activity) slipped once more in June, holding in negative territory for the 16th month running.
The index fell for the third month in a row, now to 48.6 in June from 49.2 in May. Ouch, that hurts.
"Overall, economic conditions in the second quarter were considerably weaker than in the first quarter, which means there has been no easing of the downward pressure on growth," said Zhengsheng Zhong, an economist at CEBM Group.
"Against the backdrop of a turbulent external environment, and in order to avert a sharp economic decline, the government must strengthen its proactive fiscal policy while continuing to follow prudent monetary policy," he said.
On the other hand, American manufacturing expanded for the fourth straight month in June, hitting the strongest reading in 16 months as the outlook for new orders and production improved.
The Institute for Supply Management said Friday its manufacturing index rose to 53.2 last month from 51.3 in May. Anything above 50 signals growth.
The Federal Reserve's measure of manufacturing output slipped 0.4 percent in May, however, as automobile production fell. (Typical for summer.)
The manufacturing issue is one of the most fundamental of all fundamental indicators. Let’s see how the world does and how it affects gold.
For those who would like a deeper analysis, I invite you to watch the Weekend Review our video newsletter. Simply use the link at the bottom of this report to view the report or to sign up for a free trial.
Wishing you as always, good trading,
Gary Wagner
Thegoldforecast.com