Gold Fundamental Forecast – September 19, 2016

Gold continued to edge down leading into next week’s FOMC meeting. Gold dipped $3 to trade at 1314.95 its lowest point in months. Gold steadied above two-week lows on Friday after downbeat U.S. data curbed already muted expectations for a U.S. rate rise next week but uncertainty over monetary policy kept the metal on track for its first weekly loss in three.

The CME Group’s FedWatch tool showed futures traders are now pricing in a 12 percent chance of a rate rise this month, down from 15 percent on Wednesday, after soft U.S. retail sales and manufacturing output data.

That kept a lid on the dollar, which was little changed on the week on Friday, and underpinned gold after its 1 percent slide this week. The CME Group’s FedWatch tool showed futures traders are now pricing in a 12% chance of a rate rise this month; down from 15% on Wednesday, after soft US retail sales and manufacturing output data.

That kept a lid on the dollar, which was little changed on the week on Friday, and underpinned gold after its 1 percent slide this week. Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

While expectations for a September rate rise have faded, a new Reuter’s poll of 100 economists showed a median 70% chance of an increase in December. That could weigh still on gold, which has rallied 24% this year on expectations that the Federal Reserve would hold off on further interest rate rises.

Investment appetite for the precious metal was soft, with holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, falling 3.3 tonnes on Thursday.

Demand for gold in India remained lackluster this week as higher prices hampered consumer purchases, though discounts narrowed due to a correction in the spot rate.

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 September 19, 2016

Government Bond Auctions

Date Time Country Auction

Sep 19 11:00 Belgium Holds OLO auction

Sep 20 11:30 UK Jul 2047 Gilt

Sep 21 10:30 Denmark Holds bond auction

Sep 21 11:03 Sweden Holds bond auction

Sep 21 11:30 Germany Eur 4bn 0% Oct 2021 Bobl

Sep 22 17:20 Italy Announces details of bond auction