Browsing all articles tagged with Commodity Futures Trading Commission
Apr
29

Precious Gold Rises 1 percent, Holds near One Week High

Yellow metal rose more than 1 percent on Monday and held near its highest level in more than a week as a bounce back in prices from multi-year lows failed to control investor appetite for the gold’s, leading to a shortage in physical supply.

Current bleak US growth statistics that raised expectations the Federal Reserve will keep its current pace of bond buying at $85 billion a month also supported precious metal that is typically seen as a hedge against inflation.

However investors are still roiled by the very recent event of the tumble. The question is how supportable is this physical buying as at the same time, we are still seeing funds flowing out of yellow metal. Retail investors won’t be buying bullion in hundreds of millions of dollars like the funds.

Both cash gold and futures dropped to around $1,321 on April 16, their weakest in over two years, subsequently drop below $1,500 sparked a sell-off that encouraged investors to slash their holdings on exchange traded funds. They touched an 11 day high above $1,484 on Friday.

I don’t consider gold is out of the woods yet, however there’s room for upward correction. One of the reasons why precious metal has plunged so much was the strong signs of US economic recovery.

US gold futures which often give trading cues to cash metal, hit a high of $1,472.20 per ounce. By 0226 GMT, prices stood at $1,469.60 climbed $16.00. Spot gold gain $7.51 per ounce to $1,470.01.

Premiums for gold bars have jumped to multi-year highs in Asia as of strong demand from the physical market, which has led to a shortage in gold coins, bars, nuggets and other products.

In other markets, shares in Asia crept ahead on Monday however the US dollar lost ground to the yen as markets braced for a busy week for economic statistics and central bank policy meetings in the United States and euro zone.

Holdings on the biggest gold-backed exchange-traded-fund ETF, New York’s SPDR Gold Trust continue to drop, which was a sign investors have yet to reinstate their confidence in gold. The holdings are currently at their lowest since September 2009.

The current string of underwhelming statistics will strengthen the hand of the doves at the Fed and temper any talk of tapering back the bond buying programme. The policy setting Federal Open Market Committee will announce its decision at 1815 GMT on Wednesday.

Report by the Commodity Futures Trading Commission showed on Friday that yellow metal rallied to an 11-month high in October previous year after the Fed announced its third round of aggressive economic stimulus, raising fears the central bank’s money printing to buy assets would stoke inflation, money managers and Hedge funds trimmed their net longs in gold futures and options in the week to April 23 as investors reduced optimistic bets.

 

Apr
22

Precious Gold Ralled More Than 2 Percent on Technical Buying

Precious metal jumped more than 2 percent on Monday following a rebound over $1,400 ignited technical buying, however sentiment was wobbly as steady outflows from exchange traded funds trimmed their gold holdings to the lowest in three years.

Edward Meir, metals analyst at futures brokerage INTL FCStone said that it remains to be seen which of these offsetting forces ultimately wins out and exerts its influence over yellow metal prices.

The technical stance for gold, which has sink more than 15 percent so far this year, is yet to recover although the safe haven asset could find support from a rush in physical buying in Asia and other parts of the world.

Our guess is that the sharp bounce in retail buying will probably dominate and succeed in sending prices higher over the course of the coming week or two.

It posted its largest ever daily loss in US dollar terms previous Monday, shocking veteran investors who see bullion as portfolio protection against inflation and other market risks. Prices sank to almost $1,321 on April 16, its weakest in more than 2 years.

Spot gold added $16.21 per ounce to $1,420.06 by 0631 GMT following increasing as high as $1,427.20 per ounce.

Tim Riddell, head of ANZ Global Markets Research, Asia  said that the aggressiveness of the drop suggests that we are still in a consolidation rather in a reversal role. For me the $1,435 level is likely to provide resistance.

We actually need to get back into the $1,500s to say that there’s something more substantial taking place. The close over $1,400 may have taken the negative pressure out of percious metal in the near term. A close below that level will heighten the risks of new lows

Outflows on exchange traded funds could also point out that investors were parking their money somewhere else, although previous week’s trading statistics from the Unites States demonstrate that funds had injected new money into gold futures.

Gold had rallied to an 11-month high in October previous year following the Fed announced its third round of aggressive economic stimulus, lifting fears the central bank’s money printing to buy assets would stoke inflation.

Hedge funds and money managers elevated their net longs in gold futures and options in the week to April 16, a report by Commodity Futures Trading Commission known as CFTC showed on Friday, because new money entered the market at lower prices.

 

US gold futures, which frequently dictate the spot market, strike a high of 1,427.3 per ounce climbed 2.3 percent from the previous close of 1,395.60 per ounce. The June delivery later stood at $1,419.80 added $24.20.