Advertisement
Advertisement

Gold Fundamental Forecast – August 11, 2016

By:
James Hyerczyk
Published: Aug 10, 2016, 13:41 UTC

December Comex Gold futures rose nearly 1.0% on Wednesday, finishing at $1359.20, up $12.50 as weak productivity data weighed on the U.S. Dollar making

Comex Gold Bars

December Comex Gold futures rose nearly 1.0% on Wednesday, finishing at $1359.20, up $12.50 as weak productivity data weighed on the U.S. Dollar making dollar-denominated gold a more attractive investment.

Precious metal September Comex Silver followed gold higher by posting a 2.82% increase at $20.41 while Industrial metal October Platinum finished at $1196.00, up $38.10 or $3.28%.

The biggest mover of the day was September Palladium which soared to multi-month high at $740.25, up $45.90 or 6.61%.

Gold, which is primarily used as a hedge against economic and financial uncertainty was driven higher after a report showed U.S. worker productivity fell for a third straight quarter during the April to June time period. This news drove U.S. Treasury yields lower as investors began to reduce the chances for a Fed rate hike in 2016. Lower yields weighed on the U.S. Dollar which made it a less desirable investment.

While some fundamental traders are saying that platinum and palladium are rallying because of strong car sales or reduced supply from Russia, realists are saying these markets are going up because they are relatively underpriced when compared to gold and silver. Basically, investors are getting more “bang for the buck” by buying these two markets since all metals are expected to firm when the dollar weakens.

Other traders are saying that thin market conditions contributed to the huge spike in palladium, suggesting that perhaps the rally is over-inflated and likely to correct back to more reasonable levels once the U.S. Dollar stabilizes.

As far as the forecast is concerned, one has to realize that the metals traders are being reactive rather than proactive. This means you’ll have to spend as much time watching the price action in the Dollar and following U.S. economic activity and the Fed to get a good grasp on the strength of these rallies.

Since the direction of the dollar is the primary driver of gold prices, for example, you just need to know that any weak U.S. economic reports will mean the Fed is likely to remain cautious about raising rates and this will be bearish for the dollar and supportive for higher gold prices.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

30-Minute Gold

30-Minute Platinum

30-Minute Palladium

30-Minute Silver

Today’s economic releases:

Cur. Event Actual Forecast Previous  
  AUD Westpac Consumer Sentiment (Aug) 2.0%   -3.0%  
  AUD Home Loans (MoM) (Jun) 1.2% 2.4% -0.8%  
  AUD RBA Governor Stevens Speaks        
  JPY Tertiary Industry Activity Index (MoM) 0.8% 0.3% -0.7%
  EUR German 10-Year Bund Auction -0.09%    -0.050%
  USD OPEC Monthly Report      
  USD JOLTs Job Openings (Jun)   5.574M 5.500M
  USD Crude Oil Inventories   -1.025M 1.413M
  USD Cushing Crude Oil Inventories     -1.123M
  USD 10-Year Note Auction     1.516%
  USD Federal Budget Balance (Jul)   -113.0B 6.0B
  NZD Interest Rate Decision   2.00% 2.25%
  NZD RBNZ Monetary Policy Statement      
  NZD RBNZ Rate Statement      
  NZD RBNZ Gov Wheeler Speaks      
  GBP RICS House Price Balance (Jul)   6% 16%
  NZD RBNZ Gov Wheeler Speaks    

Upcoming Economic Events that you should be monitoring:

Thursday, August 11, 2016

Cur. Event Actual Forecast Previous
  USD IEA Monthly Report      
  USD Export Price Index (MoM) (Jul)   0.1% 0.8%
  USD Import Price Index (MoM) (Jul)   -0.3% 0.2%
  USD Initial Jobless Claims   265K 269K
  CAD New Housing Price Index (MoM) (Jun)   0.3% 0.7%
  NZD Business NZ PMI (Jul)     57.7
  NZD Core Retail Sales (QoQ)   1.1% 1.0%
  NZD Retail Sales (QoQ) (Q2)   1.0% 0.8%
  CNY Fixed Asset Investment (YoY) (Jul)   8.8% 9.0%
  CNY Industrial Production (YoY) (Jul)   6.1% 6.2%

Government Bond Auctions

Date/Time Country Type

Aug 10 11:00 Germany EUR 5B 0% 2026 Bund

Aug 10 19:00 US 10-yr Note auction

Aug 11 11:30 UK 0.125% I/L 2036

Aug 11 19:00 US 30-yr Bond auction

 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

Did you find this article useful?

Advertisement