IGI Securities Limited – Commodity News
Web Desk
Karachi, January 05, 2018 (PPI-OT): Gold
Technical
Gold markets continue to chop as we await the jobs number for the month of December in America. This has a massive influence on the greenback longer term, so I think that between now and the announcement could be a bit difficult to expect some type of massive move. However, the most important thing on this chart for me as the $1300 level, as it has been significant resistance in the past, and should now be support. I believe that the market should continue to be one that’s being able to be bought on dips, as the market should then go to the $1350 level next, via the $1325 level. Remember, gold tends to be considered the “anti-dollar” and this being the case it’s likely that you will need to watch the US Dollar Index, and what happens after the announcement today. At this point, unless we broke down below the $1280 level, I think the overall uptrend is still very much intact.
Highlights
Gold prices held steady today after hitting 3 and a half month highs yesterday
It marked its highest since Sept. 15 at $1,325.86 yesterday on a weaker dollar
US private employers added 250,000 jobs in December, data from ADP Research Institute showed
With ADP out of the way, investors are now focused on today’s U.S non-farm payrolls report
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.03 percent to 836.04 tonnes
Fundamentals
Gold prices today held near 3-1/2 month highs hit the session before to remain on track for their fourth-straight weekly gain, with attention turning to U.S. payroll data due later in the day.
Spot gold was down 0.1 percent at $1,321.86 an ounce. U.S. gold futures were up 0.1 percent at $1,323 an ounce. Spot gold marked its highest since Sept. 15 at $1,325.86 on Thursday on a weaker dollar. It has risen 1.5 percent so far this week.
Weighed down by the greenback’s weakness against the euro, the dollar index against a basket of six major currencies was poised for a loss of 0.3 percent this week, during which it probed a three-month low of 91.751.
There are some new long-positions after gold crossed $1,300 and they are trying to push prices up. We can see people buying at corrections. The dollar will be the key to gold’s moves going forward. Markets are waiting for more clues on the pace of the interest rate hikes and how the tax reforms are going to help the U.S. economy.
U.S. private employers added 250,000 jobs in December, data from ADP Research Institute showed, the biggest monthly increase since March. Economists surveyed by Reuters had forecast a gain of 190,000 jobs.
Investors are now focused on Friday’s U.S. non-farm payrolls report, which is expected to show job gains of 190,000 for December. Softer economic data weakens the case for a U.S. rate hike, boosting gold, which is highly exposed to interest rates and returns on other assets. Rising rates lift the opportunity cost of holding non-yielding bullion.
Spot gold’s 14-day relative strength index (RSI) was at 73. An RSI above 70 indicates a commodity is overbought and could herald a price correction, reuters technical analysts said.
