Precious Metals Fundamental Analysis – August 19, 2015 – Forecast – Gold, Silver & Platinum

Analysis and Recommendations:

Gold moved with little conviction today trading at 1119.80 while Silver dipped to 15.21 and Platinum fell back under the $1000 level. Analysts have attributed the recent price movement to the devaluation of China’s currency, which is making it unlikely for the Federal Reserve to increase interest rates. Low interest rates are likely to keep gold prices rising.

However, Karim Merchant, Group CEO and managing director of Pure Gold Jewelers, said that the recent adjustment in bullion prices is only short term, adding that there’s a possibility of further reductions.

Merchant said he expects the price of gold to stay around $900 to $1,100 an ounce this year. “The recent price increase is just a speculative short-term movement of gold trading.”

Shailesh Dash, CEO of Al Makah Capital, said that despite the recent uptick in gold purchases, triggered mainly by bargain hunting, gold traders are still in control.

On an intraday basis, we expect gold and silver prices to trade sideways as China revealed on Friday that it boosted holdings by 1.1% in July will be supportive. While on the other hand, money managers continue to be net-short for four straight weeks.

Last week large gold futures investors such as hedge funds, referred to as “managed money”, continued to hold near record short positions and added only slightly to their long positions.

In the week to August 11 according to the Commodity Futures Trading Commission’s weekly Commitment of Traders data speculators’ short positions – bets that gold could be bought cheaper in the future – was down slightly to more than 11.4 million ounces (323 tonnes).

Longs grew by less than 600,000 ounces, but on a net basis hedge funds remain short of the metal.

Speculators went into a net short position during the week to July 21 – the first time since at least 2006, when the data was first being tracked.

Any sustained move higher could see a scramble for gold on the futures market with some analysts estimating that short covering alone could take gold $50 higher from today’s level.

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 up to the data analysis and information in our weekly reports.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Wednesday, August 19, 2015

Government Bond Auctions

Date Time Country

Aug 19 11:30 Germany Eur 5bn Sep 2017 Schatz

Aug 19 11:03 Sweden Holds bond auction

Aug 20 10:30 Spain Auctions Bonos/Obligaciones

Aug 20 11:30 UK Auctions 4.25% 2036 Gilt

Aug 21 17:30 Italy Announces details of CTZ/BTPei on 26 Aug