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Gold Fundamental Analysis – for the week of August 22, 2016 -Forecast

By:
Barry Norman
Published: Aug 20, 2016, 07:05 UTC

Gold ended the week with a small increase at 1348.15 but moves into a strong buy position this week as traders look forward to Jackson Hole and Janet

gold weekly bns

Gold ended the week with a small increase at 1348.15 but moves into a strong buy position this week as traders look forward to Jackson Hole and Janet Yellen’s speech ahead of a possible rate increase in September. San Francisco Fed President John Williams said that the central bank should raise rates “sooner rather than later.” Everyone is entitled to his or her opinion, but Williams is not a voting member of the FOMC this year. Indeed, his region, centered around San Francisco but governing the mountain states, the Pacific Coast states, Alaska and Hawaii, will not be on the voting committee until 2018.

Gold fell on Friday for the first time this week as hawkish comments from U.S. Federal Reserve officials renewed bets on a U.S. rate hike this year, but was still on track to end the week with modest gains.

“There is no clear direction from the Fed. Adding to that there are mixed views from the Fed officials,” said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

The yellow metal soared in value since the Britain voted to leave the EU as investors switched to traditional safe assets.   Moreover, gold is sensitive to higher rates by the US Fed, which lifts the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.

Amid weakening greenback and fears of Eurozone crisis, the central banks across the world will buy more gold than they sell in a bid to diversify their reserves, causing the supply constraints and subsequent increase in gold price hike.

FxEmpire provides a wide variety of analysis on a daily, weekly and monthly basis ranging from our exceptional technical analysis as well as our in-depth fundamental analysis along with our daily news and market updates. To get the best understanding of each asset it is important to review the short term daily analysis with the longer term monthly reports. To get email notification when each of these are posted please sign up for our daily newsletter.

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Upcoming Economic Events that you should be monitoring:

Week of August 22-25, 2016

Date Country Name Volatility Previous
8/23/2016 GBP Inflation Report 3
8/24/2016 EUR GDP w.d.a (YoY) 3 1.8
8/24/2016 EUR GBP s.a (QoQ) 3 0.4
8/24/2016 EUR GDP n.s.a (YoY) 3 3.1

Government Bond Auctions

Date Time Country Auction

Aug 22 10:30 Germany Eur 1.5bn Aug 2017 Bubill

Aug 23 16:20 Italy Announces details of bond auction

Aug 23 18:00 US Holds 2yr note auction

Aug 24 10:03 Sweden Holds bond auction

Aug 24 10:30 Germany Eur 4bn 0% Oct 2021 Bobl

Aug 24 18:00 US Holds 2yr FRN auction & 5yr note auction

Aug 25 18:00 US Holds 7yr note auction

Aug 26 10:10 Italy Holds zero coupon

 

 

 

 

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