Gold Monthly Fundamental Forecast October 2014

Outlook and Recommendation

Gold held steady most of the month and was headed to close near the 1220-1215 range until the US dollar surged at the very last of the month. Gold closed at 1211.60 but was expected to continue its decline. Goldman Sachs is calling for gold to trade around 1180 in October. Gold fell to a nine-month low at the end of the month as the dollar surged and commodities led by crude oil tumbled on expectations of further gains in the U.S. currency. Spot gold prices touched it’s lowest since January 1 at $1,204.40 an ounce. Though gold managed to recoup earlier losses, the metal is still down about 6 percent for the month with a quarterly drop of around 9 percent, marking the sharpest monthly loss since June 2013 and first quarterly loss this year.

The dollar surged to a four-year high against a basket of currencies and a two-year high against the euro on Tuesday after euro zone inflation fell in September.

The recent strength in the labour market in the U.S. and the outflow of gold-backed ETPs provide a negative backdrop for gold prices. According to the CFTC, the managed money combined net gold positions dropped for six consecutive weeks to 44,265 contracts, a 69% decline from early July. The short gold contracts have approached the recent peak level as of December 2013. According to Barclays, the gold-backed ETP holdings have turned decidedly negative, falling 27.5 tonnes in the month to 25 September and 77.4 tonnes for the year. However, with the bearish macro backdrop, declining sentiment, and falling prices, the gold market has priced in most of the bearish news. The market will clearly focus on the ECB announcement this Thursday for the implementation of its asset purchases program and a hint of QE next year.

FxEmpire provides in-depth analysis for each currency and commodity 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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Upcoming Economic Events that you should be monitoring:

Cur.                       Event    

Wednesday, October 1

                 CNY                    Manufacturing PMI                                                       

                 EUR                    German Manufacturing PMI                                                      

                 GBP                     Manufacturing PMI                                                       

                 USD                    ADP Nonfarm Employment Change                                                        

                 USD                    ISM Manufacturing PMI                                               

Thursday, October 2

                 GBP                     Construction PMI                                                          

                 EUR                    Interest Rate Decision                                                  

Friday, October 3

                 GBP                     Services PMI                                                    

                 USD                    Nonfarm Payrolls                                                          

                 USD                    Unemployment Rate                                   

                 USD                    ISM Non-Manufacturing PMI                                                     

Monday, October 6

                 CAD                    Ivey PMI                                                                          

Tuesday, October 7

                 GBP                     Manufacturing Production (MoM)                                          

Thursday, October 9

                 GBP                     Interest Rate Decision                                                

Friday, October 10

                 CAD                    Employment Change                                                  

Monday, October 13

                 CNY                    Trade Balance                                               

Tuesday, October 14

                 EUR                    German ZEW Economic Sentiment                                                                         

Wednesday, October 15

                 CNY                    CPI (YoY)                                                         

                 GBP                     Average Earnings Index +Bonus                               

Thursday, October 16

12:00       EUR                    CPI (YoY)                                                                          

Friday, October 17

15:30       CAD                    Core CPI (MoM)

Government Bond Auction

Date Time Country 

Oct 01 11:03 Sweden Bond auction

Oct 01 11:30 Germany Eur 5.0bn Aug 2024 Bund auction

Oct 01 11:30 UK Auctions 2% 2020 Gilt

Oct 02 10:30 Spain Bono/Obligacion auction

Oct 02 17:00 US Announces details of 3/10Y Note