IGI Securities Limited – Commodity News

Karachi, June 13, 2018 (PPI-OT): Gold

Technical

Gold markets fell a bit during the trading session yesterday, reaching down towards the $1293 level, before bouncing significantly in reaching towards the $1300 level. The market should continue to be noisy, and of course influenced by geopolitical events, something that continues to be a serious threat. Economists believe that eventually the Gold markets will rally, but that’s a longer-term call and it recognize that short-term investors are going to struggle to hang onto large positions. Market players think that the $1306 level above is roughly where the selling is, with the $1290 level underneath should offer support. Until it break out of this range, there isn’t a lot to do as far as longer-term trading is concerned. That doesn’t mean it can’t profit from this, just that it should keep expectations in line with reality, meaning that short- term trading is probably about as good as it gets.

Highlights

Gold prices fell below $1,300 an ounce yesterday to finish at one-week low in wake of Trump-Kim pact

Gold traded sideways to lower based on rising U.S interest rates and a strengthening U.S dollar

Gold is highly sensitive to U.S interest rates, which lift the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced

Dollar-denominated assets such as gold are sensitive to moves in the dollar

The Fed is widely expected to raise interest rates for the second time this year

Fundamentals

Gold prices were steady today after falling to one-week lows the session before, with investors waiting for the conclusion of the U.S Federal Reserve’s meeting later in the day for clues on the timing of future interest rate hikes.

The rate hike is almost a done deal, it is quite clear that they will most likely increase rates by another 25 basis points, but the market watchers are looking very closely on the language rather than the rate hike.

The metal is highly sensitive to U.S interest rates, which lift the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced. Investors will be looking very closely to see if there’s any forward guidance that will indicate if there will be a fourth rate hike into the year-end.

Spot gold was little changed at $1,295.30 per ounce. It touched a one-week low of $1292.60 in the previous session. U.S gold futures for August delivery were 0.04-percent lower at $1,298.90 per ounce.

U.S monthly consumer inflation rose moderately in May, suggesting the Federal Reserve could continue to gradually raise interest rates this year. Further weakness in gold prices heading into the Fed meeting, as the dollar might rally going into the policy statement.

Beyond the Fed, the ECB meeting tomorrow will also be important. Both the meetings have come hand-in-hand in trying to think about how gold prices will move.

The dollar, which measures the greenback against a basket of six major currencies, was up 0.3 percent at 110.66 yen, its highest since May 23. It has climbed by roughly 4% so far this quarter, helping to put pressure on dollar- denominated gold prices, which have lost roughly 2% for the quarter, according to FactSet Data.

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IGI Securities Limited – Commodity News

Karachi, June 13, 2018 (PPI-OT): Gold

Technical

Gold markets fell a bit during the trading session yesterday, reaching down towards the $1293 level, before bouncing significantly in reaching towards the $1300 level. The market should continue to be noisy, and of course influenced by geopolitical events, something that continues to be a serious threat. Economists believe that eventually the Gold markets will rally, but that’s a longer-term call and it recognize that short-term investors are going to struggle to hang onto large positions. Market players think that the $1306 level above is roughly where the selling is, with the $1290 level underneath should offer support. Until it break out of this range, there isn’t a lot to do as far as longer-term trading is concerned. That doesn’t mean it can’t profit from this, just that it should keep expectations in line with reality, meaning that short- term trading is probably about as good as it gets.

Highlights

Gold prices fell below $1,300 an ounce yesterday to finish at one-week low in wake of Trump-Kim pact

Gold traded sideways to lower based on rising U.S interest rates and a strengthening U.S dollar

Gold is highly sensitive to U.S interest rates, which lift the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced

Dollar-denominated assets such as gold are sensitive to moves in the dollar

The Fed is widely expected to raise interest rates for the second time this year

Fundamentals

Gold prices were steady today after falling to one-week lows the session before, with investors waiting for the conclusion of the U.S Federal Reserve’s meeting later in the day for clues on the timing of future interest rate hikes.

The rate hike is almost a done deal, it is quite clear that they will most likely increase rates by another 25 basis points, but the market watchers are looking very closely on the language rather than the rate hike.

The metal is highly sensitive to U.S interest rates, which lift the opportunity cost of holding non-yielding bullion and boost the dollar, in which it is priced. Investors will be looking very closely to see if there’s any forward guidance that will indicate if there will be a fourth rate hike into the year-end.

Spot gold was little changed at $1,295.30 per ounce. It touched a one-week low of $1292.60 in the previous session. U.S gold futures for August delivery were 0.04-percent lower at $1,298.90 per ounce.

U.S monthly consumer inflation rose moderately in May, suggesting the Federal Reserve could continue to gradually raise interest rates this year. Further weakness in gold prices heading into the Fed meeting, as the dollar might rally going into the policy statement.

Beyond the Fed, the ECB meeting tomorrow will also be important. Both the meetings have come hand-in-hand in trying to think about how gold prices will move.

The dollar, which measures the greenback against a basket of six major currencies, was up 0.3 percent at 110.66 yen, its highest since May 23. It has climbed by roughly 4% so far this quarter, helping to put pressure on dollar- denominated gold prices, which have lost roughly 2% for the quarter, according to FactSet Data.

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