(Kitco News) – The gold price is looking a little top-heavy for New York-based research firm CPM Group, which on the day of its Gold Yearbook launch, says it expects the yellow metal to stay above $1,130 an ounce in 2016.
“The gold price rose for a variety of reasons – one of which was that you had a lot of investors concerned about recessionary economic conditions in the U.S. and China, and investors are now starting to back away from that,’ explained the firm’s managing director and well-known market commentator, Jeffrey Christian.
Speaking ahead of the firm’s coveted Gold Yearbook launch, which examines fundamental trends in the market for the year, Christian said that if the metal manages to stay above $1,170-$1,180 an ounce, it would be “incredibly bullish.”
“We think the gold price could fall back to $1,130 and that would not be unreasonable to us,” he explained. The yellow metal is currently up 15.5% since the start of the year, but down after hitting a 13-month high earlier this month. On Tuesday, April gold found some momentum settling the day at $1,235.80 an ounce, up more than 1%, or $15.7 ounce.
“As investors back away from fears of recession, you will see hesitance in buying more gold and you might see shorter-term investors liquidate some of their positions,” Christian said. He explained that investors are coming to the realization that recessionary conditions will probably not come to fruition, but it will be an environment of relatively modest growth. “The stock market has probably topped out but it probably is not going to collapse either,” he said.
Going forward, investment demand is forecast to grow setting up investors to compete with central banks for gold, which should influence prices positively, CPM said.
He added, “Our expectation is that the gold price comes down over the next two quarters – second and third and by the end of year, [it] starts rising again as investor concerns of the economic outlook for 2017 starts to take hold again.”
In late 2010, CPM had previously forecasted that gold and commodity prices might reach ‘a cyclical peak in a secular bull market,’ possibly around 2011, and then decline for three to five years before resuming their upward moves. Gold and commodities prices have been declining for more than four years now, since late 2011, and the firm’s 2016 yearbook suggested that this is, “the most valid approach to future gold price trends.”
Christian added that one gold market fundamental that has been gaining importance as a positive influence on gold prices in recent years is central bank gold demand.
“The big surprise development in 2015 was the announcement by the People’s Bank of China (PBOC) in July,” he said. It was an especially important period with regard to demand from this sector, he explained.
The PBOC signaled that it had changed its attitude toward gold as a monetary reserve asset. “It announced that it had added 19.4 million ounces of gold to its holdings in June and that it would continue to buy gold and add it to its monetary reserves as it buys it, which it has been doing since July 2015,” CPM explained.
Christian said that the firm expects the PBOC to be a more active and regular gold buyer in 2016, rather than the episodic purchase they made from 2003 to 2014.
(Kitco News) – The gold market is deeming Fed Chair Janet Yellen’s latest comments on the economy and monetary policy slightly dovish as prices push modestly higher following the release of her statement.
In initial reaction to her statement, April gold future rallied more than $10 hitting a session high of $1,237.7 ounce, up more than 1% on the day.
Although Yellen remained confident that the Fed’s next move would be to hike interest rates, she stressed that any move would be gradual.
“Given the risks to the outlook, I consider it appropriate for the Committee to proceed cautiously in adjusting policy,” she said.
One of the risks Yellen highlighted for future monetary policy is the fact that the inflation outlook remains “uncertain.” She admitted that recently inflation expectations have started to drift lower; however, she also reiterated that it’s the central bank’s expectation that inflation will hit it 2.0% target over the medium term.
“The decline in some indicators has heightened the risk that this judgment could be wrong. If so, the return to 2 percent inflation could take longer than expected and might require a more accommodative stance of monetary policy than would otherwise be appropriate,” she said.
Yellen’s comments are a contrast to last week’s hawkish comments from four Federal Reserve regional bank presidents: James Bullard, Charles Evans, Patrick Harker and Dennis Lockhart, which raised market expectations that the central bank could move as early as April.
Avery Shenfeld, senior economist at CIBC World Markets, described the speech as Yellen cloaking herself in “dovish wings”, keeping the idea off an April move off the table. However, he added that there is still a possibility that the central bank moves in June,” followed by another long pause.”
“It’s been only weeks since the Fed’s dovish decision in March, so it’s no surprise today’s speech by Yellen didn’t diverge much from the wait and see stance adopted by the FOMC,” he said.
Despite her dovish tone on interest rates, Yellen was fairly optimistic on her economic outlook, saying that overall the economy has expanded “at a solid pace so far this year.”
Yellen also highlighted the risk to the central bank’s optimistic outlook and noted that even though interest rates are near historical lows the Fed still has “considerable scope to provide additional accommodation.”
“In particular, we could use the approaches that we and other central banks successfully employed in the wake of the financial crisis to put additional downward pressure on long-term interest rates and so support the economy,” she said.
(Kitco News) – Gold prices shot solidly higher and to the daily high in midday trading Tuesday, in the immediate aftermath of the release of prepared remarks from Federal Reserve Chair Janet Yellen’s speech to the Economic Club of New York. The marketplace is deeming Yellen’s comments as fully dovish on U.S. monetary policy. Respected CNBC economist Larry Kudlow termed Yellen’s comments as “very dovish.” June Comex gold was last up $17.20 an ounce at $1,239.00. May silver was last up $0.08 at $15.27.
The U.S. dollar index weakened significantly in the wake of Yellen’s comments, which is also a bullish development for the precious metals markets. In her speech in New York, Yellen said the U.S. economic growth pace has weakened a bit and the pace of interest rate increases by the Fed will be only gradual. She said global developments and slow world economic growth also pose ongoing risks for the U.S. economy. Yellen also said the FOMC is not on a preset course of monetary policy tightening. Just recently, many market watchers were thinking the Fed might raise interest rates as soon as next month. However, Yellen’s remarks Tuesday threw cold water on that notion.
Gold prices were modestly weaker in overnight trading and then moved to modestly higher levels before Yellen’s comments hit the newswires and gave the yellow metal a big boost. Short covering and bargain hunting were featured in the gold market Tuesday, following the recent selling pressure that took prices to a five-week low on Monday.
Asian stock markets were mixed overnight, while European stock markets were firmer. U.S. stock indexes were higher in afternoon dealings Tuesday and also rallied on Yellen’s comments.
The next focus for traders and investors will be Friday’s U.S. jobs report, which is arguably the most important economic report of the month.
Technically, June gold futures prices closed nearer the session high. Prices Monday hit five-week low. Gold bulls have the overall near-term technical advantage and regained some upside momentum today. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,264.10. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at 1,200.00. First resistance is seen at today’s high of $1,242.00 and then at $1,250.00. First support is seen at $1,226.00 and then at today’s low of $1,217.00. Wyckoff’s Market Rating: 6.5
May silver futures prices closed nearer the session high today after hitting a three-week low early on. The silver market bulls and bears are on an overall level near-term technical playing field. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the March high of $16.17 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.00. First resistance is seen at this week’s high of $15.375 and then at $15.50. Next support is seen at today’s low of $15.06 and then at $15.00. Wyckoff’s Market Rating: 5.0.
May N.Y. copper closed down 375 points at 220.85 cents today. Prices closed nearer the session low today and hit a nearly four-week low. The copper bulls and bears are now back on a level near-term technical playing field. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at the March high of 232.35 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the 215.00 cents. First resistance is seen at this week’s high of 225.55 cents and then at 228.00 cents. First support is seen at today’s low of 219.70 cents and then at 217.00 cents. Wyckoff’s Market Rating: 5.0.
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(Kitco News) – Gold prices ended the U.S. day session modestly higher and near the middle of the day’s trading range Tuesday, on safe-haven buying after coordinated terrorist strikes in Brussels, Belgium. April Comex gold was last up $3.40 at $1,247.60 an ounce. May Comex silver was last up $0.018 at $15.865 an ounce.
Risk aversion was back in the marketplace Tuesday, but not in panic fashion, following the terrorist attacks that occurred in Brussels. At least 31 people were killed and scores injured in two separate attacks. One attack occurred with two bombs set off at the Brussels airport, which is now closed. The other attack occurred at a metro train station by a suicide bomber. All public transit in Brussels was immediately closed.
World stock markets saw selling pressure in the wake of the attacks, but the selling was not heavy and stock markets came up from their lowest levels seen in the aftermath of the attacks. U.S. stock indexes were firmer in early afternoon trading Tuesday. Unfortunately, these types of major terror attacks are no longer extremely rare, which means the marketplace’s focus and reaction to such events is becoming shorter-lived.
Other safe-haven assets are also benefitted from the risk aversion Tuesday, as the U.S. dollar index and U.S. Treasuries were also trading higher. Crude oil prices traded not far from unchanged Tuesday. However, the near-term price uptrend in place for crude oil suggests oil prices can continue to trend sideways to higher. That’s also bullish for the entire raw commodity sector, including the precious metals.
U.S. economic data released Tuesday has little impact on markets, as attention was on the situation in Brussels.
Technically, April gold futures prices closed near mid-range. Gold bulls have the overall near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the March high of $1,287.80. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at last week’s low of 1,226.00. First resistance is seen at today’s high of $1,260.90 and then at $1,263.90. First support is seen at Monday’s low of $1,241.20 and then at $1,230.00. Wyckoff’s Market Rating: 7.0
May silver futures prices closed nearer the session low. Prices last Friday hit a 4.5-month high. The silver market bulls have the overall near-term technical advantage. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the October high of $16.372 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $15.165. First resistance is seen at today’s high of $16.04 and then at last week’s high of $16.17. Next support is seen at this week’s low of $15.725 and then at $15.565. Wyckoff’s Market Rating: 6.0.
May N.Y. copper closed down 45 points at 228.85 cents today. Prices closed nearer the session high today. Prices last Friday hit a 4.5-month high. The copper bulls have the overall near-term technical advantage. Prices are in a nine-week-old uptrend on the daily bar chart. Copper bulls’ next upside breakout objective is pushing and closing prices above solid technical resistance at 240.00 cents. The next downside price breakout objective for the bears is closing prices below solid technical support at the 215.00 cents. First resistance is seen at last week’s high of 2.3235 cents and then at 235.00 cents. First support is seen at this week’s low of 227.00 cents and then at 225.00 cents. Wyckoff’s Market Rating: 6.0.