Gold Fundamental Forecast – August 15, 2016

Gold eased almost $5 to trade at 1345 as market sentiment remained positive with US indices trading at record highs. Fed speakers over the last few days have been warning of a rate increase before the end of the year.  Gold failed to hold early gains amid further signs the U.S. jobs picture has brightened. Bullion prices was struggling in the range as first-time claims for US unemployment benefits edged slightly lower in the week ended August 6th, according to a report released by the Labor Department.

The report said initial jobless claims slipped to 266,000, a decrease of 1,000 from the previous week’s revised level of 267,000. Although gold has drawn support from a subdued dollar and low bond yields, prices have been held below August highs with narrow ranges and an underlying lack of conviction over moves. There was a fresh dip in expectations surrounding a Fed tightening at the September meeting with the chances of a move seen at around 12% compared with 18% following last week’s stronger than expected employment report. Up till now prices have risen 27 percent so far this year, largely on expectations that the U.S. Federal Reserve will hold off on further interest rate hikes. Now Market attention has centered on the 573.6-ton increase in gold ETP holdings this year, representing a 39.2 percent increase year-to-date as per market source.

While Investment demand for gold reached record first-half levels this year, a WGC report showed. Also India’s gold demand may rise in the second half of 2016 after falling to the lowest in seven years in the first half as beneficial monsoon rains will spur rural demand during the peak festive season, the WGC said. SPDR Gold Trust GLD, the world’s largest gold-backed exchange traded fund, said its holdings stood at 972.32 down 0.30 tonnes, from previous business day.

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Monday August 15, 2016

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