Gold prices are once again starting the week on a strong footing, holding gains above the key area of $1,200 and the 100-day moving average.
According to some analysts, gold continues to benefit as a safe-haven asset and from the fact that investors and traders are questioning the timing of the Federal Reserve’s first interest rate hike. The U.S. Labor Department reported Friday, in its nonfarm payrolls data, that wages last month fell 0.2%, increasing 1.7% for the full year.
Electronic trading of Comex December gold futures gapped modestly higher Sunday North American evening/Monday Asian session, opening at $1,223 an ounce, up from Friday’s pit close of $1,216.10 an ounce. Sunday was the first time the gold prices opened above the 100-day moving average since mid-August. As of 10 p.m. EST, February gold futures were trading at $1.226.4) an ounce.
Rob Kurzatkowski, senior commodity analyst, said gold could find some renewed momentum after breaking above the important technical barrier.
Electronic trading of Comex December silver futures are also seeing good momentum after opening Sunday evening/Monday morning session at $16.495 an ounce, up from Friday’s pit close of $16.419 an ounce. Similar to gold, the silver market has traded in a small range; as of 10 p.m. EST, December silver was at $16.590 an ounce.
Looking at SPRD Gold Shares (NYSE: GLD), Avi Gilburt, independent trader at Elliotwavetrader.net, said that although he is bullish on the yellow metal, he is expecting to see another decline in the near-term.
“I don’t think the bottom is in yet,” he said.
However, he added that he has been long GLD Silver iShares (NYSE: SLV) since prices broke below the 2013 lows in November.
“That was the first time I was net long in silver for three years,” he said.
For GLD, he said that he is looking for prices to hit 123 to 126. He added that along as the EFT stays above 119, he has no reason to hedge his long gold positions. However, if prices do dip below that level, then they could fall to the 100 area, (he added??!!)
In the near-term, it appears that some analysts are not only expecting safe-haven demand and interest rate expectations to be bullish for gold, but also lower oil prices.
“The impact of weaker oil remains somewhat of a wild card, but we suspect that on balance, lower oil will work in gold’s favor in that declines in energy will likely lead to additional selling in US equity stocks,” said Edward Meir, commodity consultant INTL FCStone.
Meir added that weaker oil prices could also help lower inflation expectations and would be another reason for the Federal Reserve to hold off raising interest rates.
Analysts from HSBC said they are expecting gold prices to stabilize after last week’s strong rally. They also noted that weaker oil prices could continue to destabilize equity markets, which should add to gold’s safe-haven luster.
Courtesy: Kitco News
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