Reuters | NEW YORK/LONDON April 22, 2015
By Chris Prentice and Jan Harvey
NEW YORK/LONDON (Reuters) – Gold rose past chart resistance on Tuesday, recouping most of the previous session’s losses in choppy, currency-driven trade after the U.S. dollar turned lower and bolstered bullion’s appeal.
Global stocks gained as upbeat corporate earnings offset rising worries about a possible Greek default. [MKTS/GLOB]
Spot gold <xau=>was up 0.5 percent to $1,202.90 an ounce by 1:56 p.m. EDT (1756 GMT) after surpassing resistance at $1,200 to touch a session high of $1,204. U.S. gold futuresfor June delivery settled up $9.40 an ounce, or 0.8 percent, at $1,203.10.
„We’re looking at currency and bonds today. We saw the dollar index start off really strong, and now has backed off and turned negative,“ said Phillip Streible, senior commodities broker at RJO Futures in Chicago.
The greenback reversed earlier gains against a basket of major currencies. <.DXY> A stronger U.S. dollar makes greenback-traded commodities more expensive to holders of other currencies.
Gold also gained support from trader-positioning as details emerged of a European Central Bank proposal to increase the insurance it would demand in return for emergency funding to Greek banks. Those details pressured the euro earlier in the session. [FRX/]
Gold prices have been under pressure this year from expectations that the Federal Reserve is preparing to increase interest rates for the first time in nearly a decade.
That would boost the dollar and reduce gold’s appeal. Until there is further clarity on the outlook for U.S. rates, gold is likely to struggle for direction, analysts said.
„Overall uncertainty on the timing and pace of Fed tightening adds to investors’ reluctance to put on sizeable positions at this point,“ UBS said in a note on Tuesday.
Physical demand in China, the second largest gold consumer, was lacklustre overnight, traders said, with precious metals house MKS reporting „low turnover and modest price action“ during Asian trading hours.
Traders were also watching physical demand in top consumer India, said to be strong during the Akshaya Tritiya festival, considered one of the most auspicious days to buy gold.
Supply of the metal into India rose sharply in the build-up to the festival.
Silver <xag=>was up 0.5 percent at $15.98 an ounce, as platinum <xpt=>eased 0.05 percent at $1,144 and palladium <xpd=>climbed 0.08 percent to $770.12.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Alison Williams, Louise Heavens, Jeffrey Benkoe)
Gold futures settle lower on Monday, but silver took a bigger hit amid concerns over a slowdown in China’s economic growth.
Upbeat earnings as well as economic stimulus measures in China helped buoy confidence in the stock market, luring investors away from gold.
Gold for June delivery on Comex GCM5, -0.66% fell $9.40, or 0.8%, to settle at $1,193.70 an ounce on Comex. That was its biggest one-day point loss since April 9.
But silver was pressured by concerns over a slowdown in China’s economic growth. Silver is widely used as an industrial material and that makes it somewhat sensitive to changes in economic conditions in countries such as China, said Fawad Razaqzada, technical analyst at FOREX.com.
May silver SIK5, -1.81% sank 34 cents, or 2.1%, to settle at $15.889 an ounce. That was the lowest settlement since mid-March.
Meanwhile, U.S. stocks rallied, after China’s central bank over the weekend cut the amount of reserves commercial banks are required to hold, freeing up about $200 billion for lending.
China’s additional stimulus also serves as confirmation that the Chinese will continue to gradually devalue their currency, which is near-term bullish for gold prices in China, said Tyler Richey, analyst for the 7:00’s Report.
The dollar gained ground on major rivals Monday, likely contributing more pressure to prices for dollar-denominated gold.
Still, gold has lost some of its appeal as the European Central Bank’s Mario Draghi reiterated that Greece isn’t going to be booted from the eurozone, said Adam Koos, president of Libertas Wealth Management Group.
This week, Koos said traders will be focused on the U.S. dollar.
Gold bulls will be hoping for a decline in the dollar following last week’s drop on subpar U.S. economic data, he said. “The USD has had such a huge swing to the north side this past nine months, it’s only natural to expect an exhale in rates and subsequent bump in gold.”
“There isn’t a ton of news expected this week, but the Fed’s policy meeting at the end of the month will be at the top of traders’ minds as an earlier rate hike would definitely be a game changer,” Koos said.
May copper HGK5, -1.75% lost 4.15 cents, or 1.5%, to $2.733 a pound.
Gold prices continued their downhill ride to touch a low of $1,207/ounce last week. However, they bounced from that point and closed the week at $1,218/ounce, up from $1,215.7/ounce in the previous week. The fear of gold miners cutting down on production if prices plunge below $1,200 is holding prices. The cost of production of major gold miners is about $1,350/ounce now, according to estimates of analysts.
Despite the news of US-led strikes against militants in Syria, gold prices didn’t move up much and the metal lost its appeal to investors. The US SPDR Gold Trust, the largest gold-backed exchange-traded fund, saw its holdings fall by 2.99 tonnes to 773.45 tonnes.
The Dollar index hit a high of 85.68 and closed at 85.64 for the week on strong economic data from the US.
In the US, data showed that sale of new homes surged in August and hit its highest level in more than six years. Also, the final estimate of the second quarter (April-June) GDP that was released on Friday showed that the US economy expanded by 4.6 per cent.
In the first quarter, the economy had shrunk by 2.1 per cent. Both silver and platinum prices were sharply down. Silver declined 1 per cent to $17.65/ounce. Platinum closed at $1,300.6/ounce, down 2.7 per cent.
Cues to watch
Gold traders need to keep an eye on the dollar and the developments in Syria this week.
Gold is falling on concerns over strengthening US economy and the stronger dollar. Geopolitical tensions across the globe may not help a sustained recovery in gold, but at the same time, gold prices may also not fall significantly from current levels. There are two reasons for this. One, with the mining costs of most gold producers at $1,330-1,350/ounce, they can shut mines and stop new explorations. In such a case, supply will fall and curtail prices from slipping lower.
Two, if the dollar continues to rally, there may soon come a point when it will turn a concern for exporters in the country.
A stronger dollar will hurt corporate earnings by curtailing demand for commodities priced in dollars and check rally in stock prices. When stocks melt, dollar will lose its sheen and gold may regain attraction as a safe haven.
After two weeks of back-to-back data flows, the US economic calendar is going to be light this week with only the jobless claims data on Thursday and the employment situation on Friday.
On the charts
Technically, the gold chart looks quite bearish. The downtrend in the chart is intact. This week, if prices move below $1,207, they can well test $1,200. This is a key support for the metal.
If $1,200 is broken, prices can slide even to $1,180 and then $1,050. On the upside, resistance is at $1,220 and $1,230.
Gold and silver changed direction and fell last week mainly following the latest FOMC’s decision to cut down again its asset purchase program by an additional $10 billion to $65 billion a month. This mini-taper was expected and yet it still dragged down the prices of gold and silver. Moreover, the U.S economy continues to show slow progress: the GDP for the fourth quarter grew by 3.2% – a slower pace than the third quarter, but still a good result. Conversely, jobless clams rose by 19k to reach 348k. For the week of February 3rd to 7th, several reports and events will play out this week including: U.S non-farm payroll report, RBA ECB and BOE rate decisions, U.S ISM manufacturing PMI, and U.S factory orders. Pročitaj ceo tekst
Gold makes people do wild things. Ancient Egyptians melted it to decorate their dead. Sir Walter Raleigh searched for a lost golden city. Shiny flakes of it set off a 19th-century rush to California and ship captains never stop looking for it at the bottom of the sea. Today’s investors are wildly selling it, with 2013 marking the first yearly gold-price drop since 2000. After jumping sevenfold during a 12-year bull market — a run matched by only a handful of assets, including U.S. Pročitaj ceo tekst