Gold’s rally so far this year has the potential to move to the metal back up to $1,200, but it remains in an overall downtrend, notes one analyst. “The trend on gold tends to trade in trends that can last years, and is currently in a bearish trend that started four years ago, and is now approaching some long-term support around $1000 where it may level off for a few years in a bottoming range,” said Bob Dickey, technical analyst for RBC Capital Markets, in a research note Monday. “The current bounce has the potential to reach the $1150 to $1200 area, but that would likely be another short-term peak within the overall downtrend. A true long-term buy point for gold could still be years away.” After nearing a three-month high Monday, April comex gold futures settled 1% higher on the day at $1,128 an ounce. Dickey also commented on weaker oil prices, which have been weighing on commodities as a whole. “A final low point for oil is not yet apparent, but it has found some near-term support at the 30 level and could now trade in about a 30-40 range for the next several months,” he said. “After such a big decline, a longer bottoming period is likely, so there may be no urgency to buy oil-related investments for several months. We would like to see the 30 level be tested and hold in order to better determine that a bottom has been reached.”
By Sarah Benali of Kitco News; sbenali@kitco.com
Citi: Strongest Equity-Gold Relationships Occur During Risk-Off Periods
Monday February 01, 2016 08:52
The correlation between gold and equities tends to be highest during risk-off periods, says Citi Research. That has been the case for much of 2016 so far, with equities weaker in a mostly risk-off environment but gold higher. “The average rolling 24-month correlation during the risk-on periods identified above was close to zero while the average correlation during the risk-off months was -0.15, indicating that the gold-equity relationship strengthens considerably during periods of outsized negative equity moves,” Citi says. “These risk-off periods also correlated with strong inflows into gold ETFs (exchange-traded funds) The average (month-on-month) change in ETF holdings during the risk-off periods was 30 MT (metric tons), versus only 2MT during risk-on periods. Heightened ETF interest in the yellow metal was certainly observed this January, when ETF holdings jumped 51MT, the largest (month-on-month) increase in holdings in a year.”
By Allen Sykora of Kitco News; asykora@kitco.com
Wells Fargo: Gold Draws Safe-Haven Bid After Weak Chinese PMI Report
Monday February 01, 2016 08:52
Gold got a safe-haven boost while industrial commodities sagged overnight after soft Chinese economic data, says Janet Mirasola, managing director of the Metals Group with Wells Fargo Securities LLC. “In China, (the) manufacturing PMI (Purchasing Managers Index) fell to a three-year low of 49.4, recording its sixth straight month of declines, sending Shanghai shares lower by 1.78% but tempering the sell-off as investors look for fresh stimulus from the PBOC (People’s Bank of China) ahead of next week’s New Year holiday,” she says. “Euro bourses and base commodities -- with the exception of the Shiny One (gold), which has rallied back over $1,120 on safe-haven bets -- are all ticking lower off the early opening.” Industrial commodities such as crude oil and copper are softer. However, just after 8 a.m. EST, Comex April gold was $6.60 higher at $1,123 an ounce.
By Allen Sykora of Kitco News; asykora@kitco.com
Walsh’s Lusk: Crude Oil Moves, U.S. Jobs Report Keys For Gold This Week
Monday February 01, 2016 08:13
Friday’s monthly U.S. jobs report and movement in oil prices may be the key drivers this week for gold, says Sean Lusk, director of commercial hedging with Walsh Trading. Gold posted a 5% gain for January as weakness in global equities spurred buying of the precious metal, he says. The market is above the 100-day moving average, which is around $1,107.30 an ounce for the Comex April futures, while prices were around $1,123.40 just before 8 a.m. EST. The 200-day average is at $1,134.90. “The FOMC (Federal Open Market Committee) doesn’t meet until mid-March, so I believe the gold market to nobody’s surprise goes back to watching economic data and the reaction the dollar and stock market will have,” Lusk says. “I would warrant some caution for the bulls here as the second half of February usually is met with downside action in price due to physical demand abating after Valentine’s Day. Having said that, this week’s employment data will be key, along with movement in energies.” The January U.S. jobs report will be watched for further clues on future Fed monetary policy, while weakness in crude oil in recent months has prompted concerns about the strength of consumer demand and thus economy, thereby hitting equities.
By Allen Sykora of Kitco News; asykora@kitco.com
Commerzbank: Gold ETF, Coin Purchases Strong During January
Monday February 01, 2016 08:13
Investment in gold coins and exchange-traded funds was strong in January, says Commerzbank. Analysts point out that gold ETFs tracked by Bloomberg recorded the highest monthly inflows for a year in January at almost 55 tonnes. “In the U.S., data from the U.S. Mint shows that 124,000 ounces of gold (American Eagle) coins were sold last month, 53% more than a year ago and the highest level since September,” Commerzbank says. “The Australian Mint likewise reported a substantial plus in gold coin sales in January to 47,800 ounces.”
By Allen Sykora of Kitco News; asykora@kitco.com
