What’s in Store for Gold and Metals Today

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The Asian equities markets are trading on a positive note as increased hopes of easing from China after the Premier Wen Jibao commented that easing inflation allows more room to adjust monetary policy and positive signs are emerging in the economy, expressing confidence after July data showed a further slowdown in growth.

Riskier assets including metals are presently trading on a limited upside due to increased hopes of easing from global central banks although the possibility of easing in the US is declining on the backs of positive eco data. Commodities might open strong during the morning however; gains might continue to fade during the European session due to weak consumer confidence and inflation.

Further, the Greek Prime Minister said that he will visit eurozone leaders in the coming week and promised to promote austerity measures and try to win time for deficit-reduction.

Spain is about to receive an emergency disbursement from the 100 billion-euro ($123 billion) bailout of its financial system because of restrictions the European Central Bank imposed on bank borrowing, according to a person familiar with the matter.

From US, the inflation outlook and industrial production has been positive, markets will be closely watching today’s unemployment data.  The housing starts may remain weak, as homebuyers are more attracted towards rental homes after the 2008 crash, while building permits might continue to increase and may limit much downside.  These reports will help fill in the puzzle of what to expect from the central bank come September 13th.

The Philadelphia Fed is also likely to remain weak and may continue to weaken metals later today.

Negative eurozone and weak US labor and housing sector may continue to support downside while hopes of easing may limit the same. Any bull-run in metals will be short lived, between markets and data releases.

Precious metals prices edged higher yesterday as bleak data from the euro zone led to hopes of more stimulus measures from the debt ravaged region, although indications of an improvement in the US economy kept bullion near a 1-1/2 week low hit in the previous session

Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange traded fund, stood at 1258.15 by Aug 15, remains unchanged from the previous business day.

According to the WGC, gold jewelry demand dipped 19% year-on-year in January-March 2012, and investment demand by 46%, on the back of a weak Indian currency. Globally the gold demand was down was down by 5% in April-June, according to the WGC though local prices jumped by 35% in the same period.

Industry experts say gold imports in India have dropped to around 350 tonnes in the first half of the year compared to around 553 tonnes in the same period in 2011.

With physical demand down, and risk aversion declining and support from the US Fed, declining, there is little to support gold or silver prices today. The final pieces of the puzzle will be the housing and jobs data, which are expected to print positive. Precious metal most likely gold is expected to decline; where as the positive data might support industrial metals.

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About:FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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