Wednesday, 11 December 2019
Jakarta
--:--
Tokyo
--:--
Hongkong
--:--
New York
--:--
Gold prices to return to $1,500 levels soon - analysts
Monday, 14 October 2019 11:29 WIB | GOLD CORNER |

Even though gold was getting beaten up last Friday, analysts were still optimistic that the precious metal was going to return to its key $1,500 level soon.

Gold fell more than 1% on Friday (10/11/19) with December Comex gold futures last trading near two-week lows at $1,487.70 an ounce.

Upbeat risk appetite was driving the equity markets higher and pressuring gold lower as investors awaited the announcement of a possible partial trade deal between the U.S. and China.

One of the biggest market movers on Friday was the optimism portrayed by U.S. President Trump ahead of his meeting with Chinese Vice Premier Liu He at the White House on Friday afternoon.

Trump tweeted: œGood things are happening at China Trade Talk Meeting. Warmer feelings than in recent past, more like the Old Days. I will be meeting with the Vice Premier today. All would like to see something significant happen!

Despite a major selloff in gold, analysts remain confident that gold will rise back up to its key $1,500 level and possibly test the $1,525 resistance.

"Gold will probably return to a better position this week after the Friday 'get me out for the weekend' crowd finishes the stops loss and margin selling ¦ Gold will eventually return to the over $1,500 area in the next few weeks," RBC Wealth Management managing director George Gero told Kitco News on Friday.

Technicals will also help gold this week, said Kitco senior technical analyst Jim Wyckoff.

"Bargain hunters will step in to buy the dip in prices. Charts are still overall bullish and there are still geopolitical matters that could quickly move to the front burner of the marketplace and support safe-haven gold and silver," Wyckoff explained.

If gold makes it above $1,525 an ounce, investors would want to be long gold, RJO Futures senior market strategist Phillip Streible said.

"Say the trade deal falls apart, geopolitical tensions increase, economic data weaken, gold futures will be right back up there. And if it gets over $1,525, you'd want to be long because we™ll be targeting that $1,565 again."

Geopolitical risks are not going away

Brexit developments also brought some major optimism back into the marketplace on news that Britain and the EU are scheduled to hold œintense" talks on the Brexit deal.

European Union's chief negotiator Michel Barnier and his British counterpart Stephen Barclay described earlier talks as "constructive," giving markets hope as the U.K.'s departure date nears.

Yet, aside from some good Brexit news, there is still an array of unresolved geopolitical issues weighing on the market.

"Anywhere investors look there is a new worry, whether it is Iran, Middle East, Turkey, economics, global slowdown and some of that is anti-inflationary," Gero said. "Investors should see if good Brexit news continues, and look for currency manipulation language in U.S.-China trade talks, agricultural purchases, and Chinese reaction to tariff talks."

Any new geopolitical flare-up could boost gold up very quickly, Wyckoff pointed out.

"There are still too many geopolitical events that could dampen trader enthusiasm. Slowing world economic growth, U.S.-Iran, U.S.-North Korea, U.S.-China tensions, Brexit," he said.

Friday afternoon (10/11), markets were already busy digesting the news that 3,000 personnel are either being deployed or their missions are being extended in the Middle East "to assure and enhance the defence of Saudi Arabia," according to the Pentagon.

There was also news that Turkey intensified strikes on Kurdish militia in northeast Syria as the UN stated that around 100,000 people have left their homes in the face of the Turkish military incursion.

"The humanitarian impact is already being felt. An estimated 100,000 people have already left their homes," the UN said in a statement.

Federal Reserve sounding more hawkish

Markets are pricing in a lesser chance of a rate cut in October, with the latest estimates from the CME FedWatch Tool projecting a 67% chance of a cut versus the 87% chance just a couple of days ago.

The latest hawkish speaker was the Dallas Federal Reserve Bank President Robert Kaplan, who said that it was important to keep an œopen mind on whether more easing is needed.

"It is my intention to take some time to carefully monitor economic developments ¦ I intend to avoid being rigid or predetermined from here, and plan to remain highly vigilant and keep an open mind as to whether further action on the federal funds rate is appropriate, Kaplan said last Thursday.

Kaplan's statement has led to some readjustment of rate cut expectations, said Melek.

"We had Kaplan yesterday tell the market that there is no great impetus to do a lot on the monetary front to stimulate the economy. He negated the whole idea that inflation was below expectations," Melek pointed out.

Fed could delay easing and that is a negative for gold, added Gero. œSome Fed speakers, like Kaplan, have been more hawkish than usual. I™m presuming that the Fed has access to more numbers than they publish," he said.

Data to watch

This week's biggest data release will be the U.S. retail sales on Wednesday, which are estimated to come in at 0.3% in September. The U.S. Beige book is also scheduled for publication on Wednesday.

"Retail sales are a key measure of optimism. Any weakness there should help gold, said Melek.

Other key data sets to watch include NY Empire State manufacturing index out on Tuesday and Thursday's slate of numbers such as U.S. housing data, industrial production, and the Philly Fed manufacturing index.

"Empire manufacturing ” that's October data, very important. We are going to see if the weakness continues to translate into the latter part of the year," Melek added.

Source: Kitco News

RELATED NEWS
Little conviction in gold market as trade talks ebb and flow...
Monday, 25 November 2019 11:27 WIB

Confusion and uncertainty dominates the gold market as traders and investors continue to react to shifting trade sentiment between China and the U.S. The latest Kitco News Weekly Gold Survey shows Wa...

Unique split on Wall Street to keep investors guessing the gold price this week...
Monday, 18 November 2019 11:02 WIB

This week will be an interesting one for gold with Wall Street uniquely split between expectations of higher and neutral gold prices, while Main Street is still very bullish, according to the latest K...

Less than 50% of Main Street optimistic on gold prices rally; Wall Street outright bearish...
Monday, 11 November 2019 17:10 WIB

Gold is not ending the last week on a strong note and there is not much conviction among Wall Street analysts and Main Street investors that the selling pressure will end this week, according to the l...

What happens to the gold price when Fed cuts rates this week?...
Monday, 28 October 2019 11:28 WIB

With the Federal Reserve rate cut already priced in for this week, what will actually happen to the gold price once the central bank cuts for the third time this year? Analysts sounded positive as go...

Gold Prices Gridlocked, Bears Take Wheel...
Monday, 21 October 2019 13:10 WIB

Although Wall Street bears have an advantage, ultimately, gridlock in the gold market means prices are not going anywhere fast, according to the latest results from the Kitco News Weekly Gold Survey. ...

LATEST NEWS
European Stocks Open Mixed as Investors Await Fed Decision and US-China Trade News

European stocks made a cautious start Wednesday as investors await the U.S. Federal Reserve™s interest rate decision and monitor developments ahead of the weekend™s U.S.-China trade tariff deadline. The pan-European Stoxx 600 hovered around...

Tokyo Shares End Lower as Tariff Deadline Nears

Tokyo stocks fell on Wednesday as investors locked in profits ahead of major events such as the UK election and a US Fed meeting with eyes kept on the US-China trade talks. The benchmark Nikkei 225 index slipped 0.08 percent or 18.33 points to...

Gold Treads Water Before Fed Meeting, Trade Deadline

Gold held a modest advance as traders awaited the Federal Reserve's final gathering of the year, while weighing the latest smoke signals on the trade front in the countdown to the next set of U.S. levies on Chinese goods. Palladium was near a...

POPULAR NEWS
Gold prices slip a bit ahead of Fed meeting this week
Tuesday, 10 December 2019 03:13 WIB

Gold futures settled at a slight loss on Monday, finding little reason to move in either direction ahead of a mid-week policy update from the...

Gold prices end higher for first time in 3 sessions
Wednesday, 11 December 2019 01:56 WIB

Gold rose on Tuesday, with prices finding support after posting two consecutive sessions of losses. Traders eyed the potential for a U.S.-China...

Gold Holds Drop as Equities Rally on Solid U.S. Jobs
Monday, 9 December 2019 09:27 WIB

Gold held a decline after a better-than-expected U.S. payrolls report on Friday led to a surge in equities, damping demand for haven...

FBI Investigating Shooting at US Naval Base as Terrorism
Monday, 9 December 2019 11:07 WIB

The FBI is investigating the fatal shooting at a Naval base in Florida as an act of terrorism, a special agent said Sunday. Rachel Rojas, special...