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Gold ends flat, then moves lower in electronic trade after Fed minutes

Gold prices finished unchanged on Wednesday, after spending much of the session losing ground on the back of strength in benchmark U.S. stock indexes. After future prices settled, minutes from the Federal Open Market Committee's July meeting showed that Federal Reserve officials shied away from saying how many more easing steps they might be willing to support this year. In electronic trading, gold for December delivery was at $1,514.30 an ounce shortly after the meeting minutes. The...

Gold ends higher, recoups some recent losses as bond yields slide

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Gold Prices Hold Above $1,500 Ahead of Fed Minutes, Powell

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Gold prices edge higher as bond yields slide

Gold futures edged slightly higher Tuesday, gaining some ground a day after a rally in stocks helped to prompt some selling in bullion. Gold for December delivery rose $1.80, or 0.1%, to $1,513.40 an ounce, after the commodity gave up 0.8%, while September silver picked up 4 cents, or 0.2%, to $16.970 after the white metal shed 1.1% on Monday. Precious metals were gaining some altitude as bond yields edged lower, providing some impetus for metals buying. The 10-year Treasury note yield was...

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Gold To Prioritize U.S. Economy And Geopolitics As Price Outlook Improves - Analysts
Monday, 27 May 2019 14:13 WIB | GOLD CORNER |Gold OutlookGold Corner

Gold's short-term outlook is improving as the U.S. dollar is running out of reasons to keep going higher and the U.S. equities are raising doubts about their future performance, according to analysts.

Concerns around slowing global growth will be a key driver for gold in the this week and month, Capital Economics senior commodities economist Ross Strachan told Kitco News on Friday.

"The central elements recently have been some of the concerns around global growth. And we've seen weak data out of the U.S., Europe, and China," Strachan said.

Today was another perfect example of weak economic data out of the U.S., with the April's durable goods number disappointing and revealing weak business investment, said TD Securities head of global strategy Bart Melek.

"We had durable goods numbers down 2.1%. They key was the non-defense part, which suggested that investment on the business side might not be near as robust as people would have liked and that is indicative of a slowdown," Melek said.

The implications of slower global growth are tremendous for gold, which is why Capital Economics is still keeping its year-end target level at $1,400 an ounce, which is more than $100 off the current trading level.

June Comex gold futures were closing last week 0.64% higher and were last seen trading at $1,283.60, down 0.14% on the day.

Volatility In Equities To Help Gold

Slower growth worldwide, including the U.S., means more equity volatility, which translates into higher gold prices, analysts told Kitco News.

"Increasingly, people in the market don't think equities may be a one-way bet," Melek said. "Gold is going higher."

A big sell-off in equities is coming and gold will be a clear beneficiary, according to Strachan. "The U.S. equity market could drop back sharply from current levels as U.S. growth slows significantly within the next six months and that will provide a boost to asset allocations to gold," he noted.

This type of economic outlook also changes the Federal Reserve's rate projections in favor of gold.

"That essentially adds fuel to the Fed's view that inflation isn't high enough at a time when the U.S. economy may be slowing. Yields aren't likely to move up any time soon too. So, on the 2-year we stay around 2.2% and on the 10-year, we are still below 2.4%. For gold, $1,290 is not a bad target for the next little while," said Melek.

No Room For The U.S. Dollar To Go Higher

U.S. dollar's upside potential is "running on borrowed time," FXTM research analyst Lukman Otunuga pointed out.

"While the perception that the U.S. remains in a far better condition than everyone else could continue supporting the Greenback, a sudden spell of bad data would threaten this sentiment, falling over like a house of cards," Otunuga wrote on Friday. "With speculation in the air of the Fed cutting interest rates this year and persistent concerns over slowing global growth ¦ Gold's medium to longer-term outlook remains tilted to the upside."

With the U.S. economic outlook threatened, the dollar is also no longer "immune" to the U.S.-China trade risks, added TD Securities global head of FX Strategy Mark McCormick.

"For the all the headline ping-pong this week the broad USD actually looks set to end the week lower. That partly reflects the fact that U.S. risk assets are no longer immune to the trade skirmish, especially as some critical data releases massively underperformed expectations. These drivers probably keep FX in wait-and-see mode until the G20," McCormick said.

Geopolitics In Play

Geopolitical tensions, including Brexit, EU elections last weekend, and of course the U.S.-China trade spat could also drive gold, the analysts highlighted.

With Brexit, a resolution with the EU could boost the yellow metal's prices, according to Melek.

"If there is a settlement, like a Customs Union, which is quite benign, it could see the euro move higher a bit, which means that the DXY weakens. That would be a positive for gold," Melek stated. "In a strange way, it is really the currency as opposed to the threat of some sort of instability that is driving gold."

EU elections happening across Europe last week and on the weekend are unlikely to impact gold much, said Strachan. "[They are] on the radar as an interesting development. But, it is unlikely to have implications for gold. It is not going to change the key power drivers within Europe," he said.

In terms of the U.S.-China trade dispute, it is important to keep the G20 in mind, which is scheduled for the end of June, added Strachan. "There could be twists and turns in trade negotiations. [The] G20 meeting in late June has potential to draw the two sides together," he noted.

Levels To Watch

TD's Melek is eyeing $1,290 to $1,296 on the upper end of the scale and $1,272-$1,270 on the lower end. FXTM's Otunuga pointed out that a close above $1,280 would open a door for a move to $1,300 last week.

Kitco's technical senior analyst Jim Wyckoff sees bears with the overall advantage at the moment.

"Bulls' next upside price objective is to produce a close in June futures above solid resistance at $1,300.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at the May low of $1,267.30," Wyckoff wrote.

A major support area for gold has been $1,272.70 to $1,253.00, stated FX Empire senior market analyst James Hyerzyk.

"If investors can successfully defend this area and especially the low for the year then I can build a case for a short-term rally at this time," Hyerzyk said.

Data To Watch

This week macro data includes Chinese PMI scheduled for Friday, which will be an important driver to watch, said Strachan.

"The only major macroeconomic data out this week from the metals' perspective is the Chinese PMI on Friday," he explained. "[It] is likely to be softer than the markets are anticipating. It might be a concern for industrial metals, but could provide a boost to gold prices."

It will be a shortened week in the U.S. due to the Memorial Day weekend, but traders will still get their hands on the House Price Index on Tuesday, Pending Homes Sales on Thursday, and PCE Prices Index on Friday.

Source: Kitco News

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POPULAR NEWS
Gold ends flat, then moves lower in electronic trade after Fed minutes

Gold prices finished unchanged on Wednesday, after spending much of the session losing ground on the back of strength in benchmark U.S. stock indexes. After future prices settled, minutes from the Federal Open Market Committee's July meeting showed that Federal Reserve officials shied away from saying how many more easing steps they might be willing to support this year. In electronic trading, gold for December delivery was at $1,514.30 an ounce shortly after the meeting minutes. The...

Gold ends higher, recoups some recent losses as bond yields slide

Gold futures climbed on Tuesday, with a slide in U.S. Treasury yields helping the haven metal recoup more than a third of what it lost a day earlier, when a rally in the U.S. stock market prompted some settling in bullion. Gold for December delivery rose $4.10, or 0.3%, to settle at $1,515.70 an ounce, after the commodity gave up $12, or 0.8%, Monday. September silver picked up 20.8 cents, or 1.2%, to $17.148 an ounce, following a 1.1% loss a day earlier. Precious metals gained some altitude...

Gold Prices Hold Above $1,500 Ahead of Fed Minutes, Powell

Gold prices traded lower on Wednesday as safe-haven demand faltered and investors proved cautious ahead of input from the minutes of the last Federal Reserve meeting to be followed by an appearance from the head of the U.S. central bank chief Jerome Powell on Friday. Spot gold fell $7.21, or 0.5%, to $1,500.20 a troy ounce by 7:41 AM ET (11:41 GMT), while Gold futures for December delivery on the Comex division of the New York Mercantile Exchange, lost $5.55, or 0.4%, to $1,510.15. The Fed...

Gold prices edge higher as bond yields slide

Gold futures edged slightly higher Tuesday, gaining some ground a day after a rally in stocks helped to prompt some selling in bullion. Gold for December delivery rose $1.80, or 0.1%, to $1,513.40 an ounce, after the commodity gave up 0.8%, while September silver picked up 4 cents, or 0.2%, to $16.970 after the white metal shed 1.1% on Monday. Precious metals were gaining some altitude as bond yields edged lower, providing some impetus for metals buying. The 10-year Treasury note yield was...

Oil Steadies After Report Indicates Drawdown in U.S. Stockpiles

Oil was steady in Asian trading after a private-sector report indicated that U.S. crude supplies had tightened in the past week. Futures in New York rose 3 cents, after clawing back losses in a volatile session on Tuesday. The market had stumbled after U.S. Secretary of State Mike Pompeo told CNBC that Huawei Technologies Co. and other Chinese companies pose national security threats to the U.S. A recovery came as focus switched to analyst forecasts that...

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