ABN AMRO: GOLD WILL BE CHEAP AT LEAST UNTIL 3Q 2017

Analysts from ABN Amro report: “Gold investors will have to wait at least one more year before they can expect to see a sustained recovery of the gold market."

ABN Amro's forecast for 2016 says about further weakening of gold and silver at the beginning of 2016. According to them, the price will drop below $1,000 per ounce of gold and below $13,5 per ounce of silver.

Major factors of pressure on the gold market are the strengthening US dollar and tightening monetary policy of the Fed .

“We expect investors to continue to liquidate positions in the months ahead because of a higher US dollar and higher U.S. rates. It is likely that new lows in prices will be reached before the end of the first quarter of 2016. We expect the Fed to raise rates very slowly in 2016, but even this scenario is not priced into markets. A rise in U.S. Treasury yields should push gold prices towards USD 900 per ounce or even below.”

Despite the fact that analysts are negative on the gold for the coming year, they note that there is potential for short-term periods of growth.
"Gold prices may be supported in waves of risk aversion. However, when there is systemic risk in financial markets it will not behave as the ultimate safe haven asset. For example, at the height of the global liquidity crisis (when there was a shortage of liquidity) gold prices dropped sharply because investors valued cash more than gold," experts write.
Analysts do not expect gold and silver prices to recover before the third quarter of 2017.

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GOLD RISES BUT REMAINS NEAR MULTI-YEAR LOWS WITH U.S. GDP IN FOCUS; IRON ORE SINKS

On Tuesday gold prices slightly recovered but remained near the prior session's five-and-a-half-year low as investors anticipated the release of revised U.S. third quarter economic growth data later in the day for a fresh reading on the strength of the economy.

Comex gold for December delivery rose 0.72%, to trade at $1,074.50 a troy ounce.

On Monday, prices fell to $1,065.00, not far from last week's low of $1,062.00, a level not seen in almost six years.

Gold futures are down more than 6% so far this month amid growing expectations the U.S. central bank will raise rates for the first time in nearly a decade at its mid-December meeting.

The U.S. is to release preliminary figures on third quarter economic growth at 8:30AM Eastern Time Tuesday. The report is expected to show that the economy grew 2.1% in the three months ended September 30, compared to last month's advance estimate of 1.5%.

Meanwhile, silver futures for December delivery rose 8.3 cents, or 0.59%, to trade at $14.11 a troy ounce. On Monday, prices hit $13.85, the weakest since August 2009.

Platinum futures for January delivery lost 0.42% to trade at $843.80, while palladium for delivery in March was at $543.60, up 0.33%.

Copper prices rose 0.53% to trade at $2.031. They were still not far above the prior session's six-year low on Tuesday as expectations of higher borrowing costs in the U.S., a stronger greenback and slower global economic growth, especially in China, pressured the metal.

Prices of the red metal have lost over 12% so far this month as persistent worries about future demand from top consumer China and a stronger greenback slammed commodities.

Also Tuesday, iron ore sank to the lowest level in at least six years amid speculation that mills in China are reducing steel output, hurting demand for the raw material while supplies from the biggest miners expand.

Ore with 62% content delivered to Qingdao fell 1.9 percent to $43.89 a dry metric ton, the lowest in daily data dating back to May 2009, according to Metal Bulletin Ltd. The commodity is headed for a third annual retreat, and Tuesday’s fall offset the previous trough of $44.59 set in July.

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GOLD PRICES SURGE AS FED UNCERTAINTY FADES

Gold prices rose on Thursday, on a short-covering and bargain-hunting bounce after prices dropped to a 5.5-year low Wednesday.

Comex gold for December delivery last traded at $1,082.10, up 1.24%, while December Comex silver was last seen at $14.305 an ounce, up 1.63%.

Market players are still discussing the minutes of the last Federal Reserve Open Market Committee (FOMC) meeting, which showed that the committee members agreed U.S. economic conditions are now in place for an interest rate increase in December.

Gold prices saw a rebound and U.S. stock indexes extended gains in a classic "sell the rumor, buy the fact" scenario, after so much market worries in recent weeks and months over when the Fed will make its first interest rate rise in nine years.

One dovish element in the FOMC minutes was the reference that any future U.S. interest rate increases will be gradual. Many market observers had already believed the Fed will increse interest rates by 0.25% in December and Wednesday’s FOMC minutes bolstered this view. Most market participants will be glad when the rate hike finally happens, to remove the uncertainty of the matter and so the general discourse of trading and markets can focus on something else.

With gold’s decline to a 5.5-year low Wednesday, fresh longer-term chart damage was inflicted to suggest a challenge of the $1,000.00 level in the coming weeks or few months. However, from a longer-term perspective, looking out over the horizon in the coming years, Jim Wyckoff from Kitco News reiterates: gold, silver and many other markets’ prices at present low levels do present a longer-term "value-buying" potential for investors. He is referring to the "buy and hold" investors, rather than the shorter-term to intermediate-term traders.

He writes that he is confident that gold prices will touch a new record high in the coming years, and possibly sooner than most would ever imagine. If you examine the charts, markets’ price history shows that raw commodities experience cycles of boom and bust are well-defined. The present bust cycle in the raw commodity sector, Wyckoff says, is very mature and will possibly end sometime next year. The fact that so many market observers are now very bearish raw commodities is another clue that the bottom of the bust cycle is not far off.

In other news, China’s central bank reduced its interest rate on its standing lending facility to 2.75% on an overnight basis and to 3.25% on a seven-day basis. The move was not considered a major monetary policy action, but highlights the People’s Bank of China’s incline toward further monetary stimulus.

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THERE ARE SIGNS OF PHYSICAL DEMAND FOR GOLD - HSBC, COMMERZBANK

Two major lenders have recently noticed signs of physical demand for the yellow metal.

HSBC said in a late-Tuesday note:

“The drop below $1,100/oz has stimulated Indian buying, which has been very sluggish for weeks.”

“We also suspect demand is increasing from China and other emerging markets. The most recent data from China show deflationary trends persisting, but this should not impact the demand for gold jewelry bars and coins noticeably, we believe.”

What Commerzbank added on Wednesday was:

“Physical gold demand in China still appears to be robust and indeed to be picking up, given that the premiums on the Shanghai Gold Exchange have risen to $4-5 per troy ounce as compared to world market prices.”

Meanwhile, Citi pointed out in a note that gold may be oversold, now that expectations for a Fed rate increase in December are soaring.

Gold had already sold off going into the Nov. 6 jobs data on ideas that Fed officials may have become more hawkish, with the metal declining below Citi’s fourth-quarter forecast of $1,110 an ounce and continuing on to a low below $1,090. Citi noted that the robust job numbers left someone with the impression that a soft report for September was a blip rather than start of a weakening trend.

“That said, while October job growth was unquestionably strong, in our view, the current sell-off in gold may be somewhat overdone given continued uncertainty around emerging markets and global growth and a Fed that has proven to be easily swayed by market volatility; we see potential for a modest rebound in the yellow metal over the coming weeks,” Citi says.

Gold-price moves on nonfarm-payrolls Fridays are likely to pale in following trading sessions “due to investors sometimes ‘overshooting’ to the downside on NFP Fridays,” Citi says.

“Based on this, we think the yellow metal may see some upside from here, particularly as investors continue to question the Fed’s reaction function.”

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GOLD SLIGHTLY HIGHER AFTER U.S. HOUSING DATA

On Tuesday gold futures were little changed, after data indicated the number of housing starts issued in the U.S. rose more than expected in September, while building permits fell more than forecast, providing a blurred picture of the economy and adding to uncertainty over the timing of a U.S. rate hike.

Comex gold for December delivery added 0.03%, to trade at $1,173.10 a troy ounce during U.S. morning hours, while Comex silver for December delivery was up 0.06% to trade at $15.850.

Yesterday gold lost $10.30, or 0.87%, on bets the Federal Reserve could still raise U.S. rates this year.

The U.S. Commerce Department said that housing starts rose 6.5% to 1.206 million units last month from August’s total of 1.132 million units, while analysts had expected 1.140 million.

The number of building permits released dropped by 5.0% to 1.103 million units from August’s total of 1.170 million. Economists expected building permits to fall by 0.9% to 1.164 million units in July.

Market players have been trying to calculate when the Fed will increase interest rates for the first time in nearly a decade after recent economic reports offered a mixed picture of the U.S. economic growth.

The yellow metal surged to a four-month peak of $1,191.70 last week amid speculation the Fed will not raise rates until sometime next year, with weak economic reports on retail sales and manufacturing activity feeding that view.

However, positive inflation data and upbeat consumer sentiment released at the end of last week prompted investors to rethink whether Fed policymakers will wait until next year to hike rates.

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GOLD CLIMBS AHEAD OF U.S. DATA

Gold futures were slightly higher on Tuesday as market players awaited reports on the U.S housing sector later in the day for further hints on the strength of the economy and the future path of interest rates.

Comex gold futures for December delivery added 90 cents, or 0.08%, to trade at $1,173.70 an ounce.

Comex silver for December delivery was up 0.44% to trade at $15,910 an ounce.

The U.S. Commerce Department is expected to issue a report at 8:30AM Eastern Time. Analysts expect housing starts to rise 1.2% in September to 1.140 million, while building permits are forecast to drop 0.9% to 1.160 million.

The possibility of a Fed rate increase has been a constant source of debate in the markets in recent months. The U.S. central bank has two more scheduled policy meetings before the end of the year, in late-October and mid-December.

Earlier in the day, the dollar had climbed 0.4% against a basket of currencies and rose against the euro as investors waited to see if the European Central Bank would offer more stimulus at a meeting this week.

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GOLD STILL DOWN AFTER U.S. DATA

Gold was lower Friday after positive data from the U.S.

The University of Michigan said its consumer sentiment index climbed to 92.1 this month from a reading of 87.2 in September. Economists had expected the index to rise to 89.0 in October.

The report came after data showed that industrial production dipped 0.2% last month, in line with forecasts. Industrial production declined 0.1% in August, whose figure was revised from a previously estimated 0.4% drop.

U.S. manufacturing production slipped 0.1% in September, compared to expectations for a 0.2% fall. Manufacturing production declined 0.4% in August, whose figure was revised from a previously estimated 0.5% slide.

Comex gold for December delivery was last at $1,182.70, down 0.40%. December Comex silver was trading at 16.095, down 0.43%.

Elsewhere, crude oil continued its decline Friday. Investors closed positions at the end of a volatile week that saw prices slide nearly 10 percent on renewed signs a global supply glut was here to stay.

The slump came after the International Energy Agency predicted the market would remain oversupplied through 2016. However, oil futures were supported by strong stock markets and positive U.S. data.

Brent crude's new front-month December contract was last down 23% at $49.62. November Brent expired at $48.71 on Thursday, down 44 cents on the day.

U.S. crude's front-month November contract traded 0.22% higher at $46.49 a barrel.

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GOLD CLIMBS AHEAD OF U.S. CPI DATA

Gold held overnight gains on Thursday as investors awaited data on consumer prices in the U.S.

Comex gold for December delivery rose 0.26% to $1.182.70 a troy ounce.

December Comex silver was lower 0.04% to $16.110 a troy ounce.

December Comex copper edged up 0.22% to $2.421 a pound.

Investors await the release of the Consumer Price Index in the U.S. later in the global day for further signals on if Federal Reserve could raise short-term interest rates before the end of the year.

Economists expect the headline CPI to fall by 0.2% for the month, but await that the core reading will climb 0.1% from its level in August.

Overnight, gold futures jumped more than $10 an ounce on Wednesday hitting near-four month highs, as investors rushed to the safe haven asset amid a series of disappointing economic data around the globe.

Wednesday jump in gold coincided with a sell-off in the greenback, following the release of disappointing reports on retail sales and producer pricing last month.

On Wednesday morning, the U.S. Department of Commerce said retail sales nationwide climbed 0.1% in September, matching the low end of consensus estimates. Gasoline sales weighed significantly on the overall reading, plunging by 3.2% for the month. The core reading, minus auto and gas sales, remained flat on a monthly basis, but it remained by 3.8% over the last year.

Elsewhere, the U.S. Bureau of Labor Statistics said its Producer Price Index dipped by 0.5% in September, below low estimates of consensus forecasts for a 0.4% monthly loss. On a yearly basis, the data is just as grim. Over the last 12 months, producer prices have fallen by 1.1%, down from a fall of 0.8% in August.

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GOLD EXTENDS GAINS AFTER DOWNBEAT U.S. DATA

On Wednesday gold futures extended rally to hit a three-month high, after data showed retail sales in the U.S. rose less than expected in September, undermining optimism over the strength of the economy and dimming the case for higher interest rates.

December Comex gold hit an intraday peak of $1,176.00 a troy ounce, the highest level since June 30, before trading at $1,174.10 during U.S. morning hours, up 0.75%.

A day earlier, gold inched up 90 cents, or 0.08%.

December Comex silver was last up 1.21%, trading at $16.110 an ounce.

Earlier, the U.S. Commerce Department said retail sales climbed by 0.1% last month, below expectations for a rise of 0.2%. Retail sales for August were revised down to a flat reading from a previously reported increase of 0.2%.

Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy.

Core retail sales, which exclude automobile sales, declined 0.3% in September, worse than forecasts for a fall of 0.1%. Core sales in August decreased 0.1%, whose figure was revised from a previously reported gain of 0.1%.

Core sales correspond most closely with the consumer spending component of the government's gross domestic product report. Consumer spending amounts for as much as 70% of U.S. economic growth.

Separately, the Commerce Department said that producer prices dipped by a seasonally adjusted 0.5% last month, worse than the expectation for a drop of 0.2% and after holding flat in August.

The core producer price gauge pushed down by a seasonally adjusted 0.3% in September, below expectations for a rise of 0.1% and following an increase of 0.3% a month earlier.

The downbeat data fanned hopes that Fed officials could delay raising interest rates until the first half of 2016.

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GOLD EXTENDS GAINS TO HIT THREE-WEEK HIGHS; COPPER DOWN ON CHINA

On Wednesday gold futures rose for a fourth session in a row to hit a three-month high as a broadly weaker U.S. dollar coupled with ongoing expectations that the Federal Reserve will delay hiking interest rates until 2016 boosted the appeal of the precious metal. Meanwhile, copper declined impacted by downbeat China CPI.

Comex gold for December delivery hit an intraday peak of $1,174.50 a troy ounce, the highest level since June 30, before consolidating at $1,174.00 during European morning hours, up 0.74%.

Yesterday gold inched up 90 cents, or 0.08%.

Comex silver for December delivery was last up 0.68% to $16.015 an ounce.

Investors were looking ahead to U.S. economic reports on retail sales and producer price inflation later in the day for further clues as to the future path of interest rates.

Meanwhile, December Comex copper dipped 0.10%, to hit $2.385 a pound during morning hours.

Government data released earlier signaled that Chinese producer prices fell 5.9% in September, the 43rd straight monthly decline and matching the worst reading since October 2009.

Consumer prices climbed 1.6% last month, below expectations for 1.8% and down from 2.0% in August.

The weak inflation data added to expectations Beijing will have to launch further stimulus measures to boost growth.

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GOLD, COPPER DROP AFTER CHINA TRADE DATA

On Tuesday gold futures eased off yesterday's seven-week high, but losses were capped amid mounting confidence that the Federal Reserve will hold off on hiking interest rates until 2016. Copper were also lower after official numbers showed that China's trade surplus widened more than expected last month.

Gold for December delivery on the Comex shed 0.67%, to trade at $1,156.70 a troy ounce during European morning hours. Comex silver for December delivery was last at $15,740 an ounce, down 0.78%.

On Monday, gold surged to $1,168.60, the most since August 24, before ending at $1,164.50, up $8.60, or 0.74%.

Comex copper for December delivery dipped 0.48%, to hit $2.404 a pound during morning hours in London.

Data released earlier showed that China's trade surplus widened to $60.3 billion last month from $60.2 billion in August, compared to estimates for a surplus of $46.8 billion.

Chinese exports slumped 3.7% from a year earlier, better than forecasts for a decline of 6.3%, while imports dropped 20.4%, far worse than expectations for a drop of 15.0%.

A slowdown in domestic demand signaled a recovery in the broader economy remains vulnerable and may need further government support.

Meanwhile, China’s copper arrivals in September rose nearly 24% from August to 460,000 metric tons, signaling that demand for the metal remains robust despite recent market turmoil.

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GOLD HITS 6-WEEK HIGHS ON FED, 'OUTSIDE MARKETS' FACTORS

Gold prices have hit a six-week high in early U.S. trading Friday on dovish FOMC minutes.

The latest Fed minutes and bullish "outside markets" are supporting gold and silver today. Gold’s rally today is impressive, given the U.S. stock market has logged good gains this week, amid more of a "risk-on" trader and investor appetite.

December Comex gold was last at 1,154.60, up 0.88%.

December Comex silver was last up 0.44% at $15.835 an ounce.

The FOMC minutes did not move the markets in a big way, but reaffirmed the notions among many market watchers that world price deflation and sluggish global economic growth concerns will keep the Fed from raising interest rates, at least for the rest of this year.

Though they said overseas turmoil had not "materially altered" economic prospects, they chose to stand pat on the current policy last month.

The key "outside markets" see the U.S. dollar index lower and at a three-week low today, partly on the dovish FOMC minutes. The DXY was last down 0.45% at 94.888.

The U.S. dollar bears have gained technical momentum this week. Crude oil prices are higher and hit a two-month high of $50.88 a barrel overnight, as the Russian military actions in Syria is escalating and making NATO nations very nervous.

Elsewhere, investors will eye fresh U.S. economic data to be released later in the day, which includes import and export price indexes and monthly wholesale trade data.

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GOLD NEAR TWO-WEEK HIGHS

Gold kept its gains on Wednesday approaching two-week highs with minutes from the U.S. central bank on tap.

Comex gold for December delivery was last at $1,152.00, up 0.49%.

December Comex silver was down 0.09% to $15.97, while copper rose 1.54% to 2.391.

Gold would benefit from any delay in raising U.S. interest rates as the precious metal would struggle to compete with yield-bearing assets. Higher rates would also boost the dollar, which would make dollar-denominated gold more expensive for holders of other currencies.

A day earlier, the International Monetary Fund slashed its global growth forecasts for a second time this year, warning that slower growth in China and the protracted rebalancing in the commodities market posed increased downside risks to growth.

No major economic reports are due today. Minutes from the last Fed meeting are slated to get released Thursday, along with weekly jobless claims.

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GOLD RALLIES AS U.S. JOBS REPORT DISAPPOINTS

Gold is seeing a rally in the wake of a big miss to the downside in today’s closely-watched U.S. jobs report. Heavy short covering in the futures market and perceived bargain buying in the cash market are featured.

Comex gold for December delivery was last up $19.90 at $1,133.30 an ounce.

December Comex silver was last up $0.3659 at $14.875 an ounce.

This morning’s September U.S. jobs report showed the key non-farm employment figure up just 142,000. Analysts expected the jobs figure to be up 200,000.

However, the big miss to the downside falls into the camp of those policy makers who want the central bank to postpone the increase until next year on a U.S. rate hike. That was also great news for the raw commodity market bulls, including the precious metals.

The U.S. dollar index sold off sharply, being last down 0.72% at 95.493, and U.S. Treasuries rallied on the U.S. jobs data. U.S. stock indexes declined on the news.

In overnight news, producer prices in the euro area were 0.8% lower in August from July and down 2.6%, year-on-year. The declines were more than economists expected and added to the growing concerns over price deflation in the European Union.

The European Central Bank is now under renewed pressure to implement further monetary policy easing measures, at a time when the U.S. is leaning to tighten its monetary policy.

The Euro currency was sharply higher, however, with EUR/USD last trading at 1.1300, up 0.96%.

Russian air strikes in Syria late this week are an added element to an already unstable Middle East region, boosting oil prices, however.

Other U.S. economic data due for release Friday includes the ISM New York business report, and manufacturers’ shipments and inventories.

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GOLD SLIDES FROM THREE-WEEK HIGHS AS DOLLAR, EQUITIES RECOVER

Gold futures turned lower on Monday to fall from the highest level in nearly three weeks as the U.S. dollar and global equity markets rebounded from a brutal selloff in the prior session in wake of the Federal Reserve’s decision not to hike interest rates.

Comex gold for December delivery hit an intraday peak of $1,139.40 a troy ounce before turning lower to trade at $1,132.60 during U.S. morning hours, down $5.20, or 0.46%.

The dollar pushed higher against the other major currencies on Monday, as the greenback continued to recover from the Fed's decision last week to hold interest rates at current levels.

EUR/USD was last at 1.1233, lower 0.59%.

GBP/USD was last at 1.5513, lower 0.10%.

Global equity markets rose along with other risk-sensitive assets, such as oil and copper, recovering from steep losses suffered Friday.

U.S. stocks opened higher on Monday, bouncing after a big post-Fed selloff last week.

Investors waited for home-sales data and a speech from a key Federal Reserve member to provide further direction. The S&P 500 opened 11 points, or 0.6%, higher at 1,968. The Dow Jones Industrial Average added 100 points, or 0.6%, to 16,482 at the open. The Nasdaq Composite began the day higher, up 26 points, or 0.5% at 4,854.

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GOLD DIPS AFTER HITTING ONE-WEEK HIGH AHEAD OF FOMC

Gold prices were trading close to their highest level in a week on Thursday as weak U.S. inflation data weighed on the dollar and raised hopes that the Federal Reserve would hold off hiking interest rates.

Comex gold futures for December delivery were dipped 0.15% to $1,117.30 an ounce, compared to overnight highs of $1,122.4.

Meanwhile, the dollar remained under pressure ahead of the conclusion of the closely watched Fed policy setting meeting later in the day amid uncertainty over whether the central bank would hike short term interest rates for the first time in almost a decade.

A rise in interest rates would boost the greenback by making it more attractive to yield-seeking investors, while putting gold under pressure, as it doesn’t yield interest.

EUR/USD was last at 1.1318, higher 0.23%, and GBP/USD also added 0.23% to trade at 1.5527.

We’ll get the Federal Open Market Committee statement with the rate-hike decision at 2 p.m. Eastern, with Yellen’s news conference half an hour after that.

Several economic reports come out before the Fed grabs the spotlight. Readings on weekly jobless claims and housing starts are slated to hit at 8:30 a.m. Eastern, followed by the Philly Fed survey at 10 a.m.

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GOLD PRICES QUIET AHEAD OF FOMC; U.S. STOCKS LITTLE CHANGED AT OPEN

Gold prices are slightly higher in subdued early U.S. trading Monday.

Analysts have seen some light short covering in the futures market and bargain hunting in the cash market. At the same time, many market players are standing on the sidelines before this week’s highly-anticipated FOMC meeting.

December Comex gold was last up $1.50 at $1,104.80 an ounce.

December Comex silver was last down $0.12 at $14.385 an ounce.

The Federal Open Market Committee meeting on Wednesday and Thursday is the epicenter of attention this week.

A statement and press conference from Fed Chair Janet Yellen are set for Thursday afternoon.

Market analysts have not come to a consensus on whether the central bank will make an interest rate hike for the first time since 2009 at this week’s meeting, or wait until December, or next year.

The U.S. Fed funds futures market presently suggests the Fed will not make a rate hike in September.

Asian stock markets were weaker overnight, as there was more mostly downbeat economic data coming out of China.

China’s industrial output in August was up 6.1%, year-on-year, which was better than July’s 6.0% growth, but lower than the consensus forecast of up 6.6% for August. Fixed asset investment in China during January-August was also lower than expected. However, China’s retail sales in August were higher than expected.

China’s Shanghai gauge was down 2.7% Monday and Japan’s Nikkei stock index was down 1.6% on the day.

U.S. stocks opened little changed on Monday. The S&P 500 opened flat at 1,960. The Dow Jones Industrial Average opened unchanged at 16,427. The Nasdaq Composite began the day up 6 points, or 0.1% at 4,828.

In other news Monday, industrial production in the Euro zone rose 0.6% in July from June and was up 1.9% on the year, which was better than expected.

The dollar was mostly higher against its rivals with EUR/USD plunging 0.28% to 1.1307. GBP/USD hit 1.5396, lower 0.19%.

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GOLD INDUSTRY: "PEOPLE ARE STILL EAGER TO INVEST IN JEWELRY"

CEO at XCel Brands Robert D’Loren is sharing his view on the state of mind of average consumers and their investment desires. His opinion is a quite interesting insight into the industry and how businesses adjust their strategies to the current market situation.

It is too early to say whether the current market volatility significantly impacts the consumer confidence, D'Loren says. The trend nowadays is that consumers are no more physically presented in the stores, and the businessman explains that in the recent years consumers have become more confident with the distance shopping - through interactive television or online sale. This trend fits into business strategies of many companies.

D'Loren suggests that people are still willing to invest in jewelry, as weaker prices for the metal weigh. However, businesses should adjust them keeping in mind the current market environment...

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5 REASONS TO BELIEVE GOLD PRICES COULD RECOVER TO $1,200 AT YEAR-END - HSBC

The bank made a forecast for the price of gold at year-end and estimated that it will be increase as much as 10 percent higher than current levels. The bank set out five reasons in a report on Friday for the experts to believe gold prices could recover to $1,200 per ounce at the year-end.

1. Fed tightening is already priced into gold
"With a shift in the Federal Reserve's policy having been anticipated in the financial markets since as early as 2013, some of the declines based on a rate rise have already occurred." Thus, the reaction of the gold may not be negative one in any case.

2. Actual Fed hikes could see gold prices rise
"This pattern has important ramifications for gold. History shows that gold prices…generally rise, though sometimes with a lag, after the first rate hike."
3. There's scope for a short-covering rally
Short positions on the Comex touched the peak on July 7 while long positions are at their highest since December 2009.

4. Low prices will, ultimately, spur demand
"In important gold consuming nations, such as China, India, Indonesia, and Vietnam, as well as other EMs, consumers may have fewer tools at their disposal with which to protect savings and household wealth against rising prices or low or negative real interest rates."

5. Central bank buying will remain supportive
"The PBoC is an important central bank with significant influence. The mere fact that they have accumulated gold may lead other EM central banks to examine purchasing bullion. Also many central banks hold quite low levels of gold reserves in relation to their forex holdings, leaving room for further accumulation."

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GOLD - WE ARE LOOKING FOR $980 PER OUNCE

Gold dropped below key support level at $1150 and for now we are looking at the next support target near $980. Historical support level for gold is $1180 which was broken as well and the price to continue falling towards the next support level at $980.

It was in March 2015 when gold fell below $1180 and traders waited for a further fall but price rebounded. And for now, the gold has fallen below $1180 and the next target for now is $980.

By the way, the gold price moved sideways for two years starting in June 2015. And between June 2013 June and January 2015 the sideways movement was below the long-term trend line with the primary bearish condition.

The bearish features on the gold chart showed that there is a good probability for the gold to break $1150 support and a continuation of the downtrend towards  $980.

Credit: mql5.com

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