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Fundamentals Pointing To Gold Declines

By:
Barry Norman

Gold drifted lower in Friday’s quiet Asian session to reach 1067.40 as traders prepare for a busy December. As the new month rolls in on Tuesday

Fundamentals Pointing To Gold Declines

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Fundamentals Pointing To Gold Declines
Fundamentals Pointing To Gold Declines
Gold drifted lower in Friday’s quiet Asian session to reach 1067.40 as traders prepare for a busy December. As the new month rolls in on Tuesday speculators and investors will be looking at some of the most significant data for the year as well as trying to book profits before the Christmas holidays begin. This year with the most important event scheduled for the 3rd week of December, the Fed interest rate decision will keep investors on edge into the holiday season.

US financial markets were shut yesterday for Thanksgiving. The euro has fallen 3.6% versus the dollar this month, just short of the 3.7% drop in the krone, which is pegged to the 19-nation shared currency. The yen has weakened 1.6%.

“We will do what we must to raise inflation as quickly as possible,” Mr Draghi said last week. Inflation is “very low,” ECB vice president Vitor Constancio said in an interview on Wednesday. Gold speculators indicate a 72% chance the Fed will boost its main rate by its December 15-16 meeting. That may send the euro lower before the ECB’s gathering next Thursday, with a risk it will drop as low as 95c by the first quarter of next year, according to Goldman Sachs Group.

CNBC reports that According to Bank of America Merrill Lynch’s weekly flows report, investors yanked $1 billion from precious metals funds in the week to Nov. 25, the chunkiest outflow in 17 weeks. Data this week were based on four days of fund flows as opposed to the normal five due to Thanksgiving holiday, the bank said.

Precious metal funds typically focus investments in companies that mine, explore or deal in gold and other metals such as silver and platinum, the prices of which have been under the cosh recently.

Gold is currently trading at $1,067 an ounce, near its lowest level since February 2010. Platinum, meanwhile, is close to a seven-year trough at $852 an ounce.

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In addition, news of lower gold imports into China may have also weighed on the precious metal. China’s net imports of gold from Hong Kong dropped for the first time in four months, according to data from the Hong Kong Census and Statistics Department compiled by Bloomberg.

Holdings in gold-backed exchange-traded products shrank for a sixth day to 1,493.5 metric tons on Wednesday to the lowest level since February 2009, data compiled by Bloomberg show.

The U.S. will release initial jobless claims on Dec. 3 and non-farm payrolls a day later. The last U.S. payrolls report before the Fed’s December policy meeting will probably show that the economy added almost 200,000 jobs in November after surging a month earlier. The jobless rate is forecast to hold at 5 percent, the lowest since April 2008.

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