IGI Securities Limited – Commodity News

Karachi, July 17, 2018 (PPI-OT): Gold

Technical

Gold markets initially rallied to start the week, but ran into trouble at the 50 hour EMA. The slope of the moving average is lower, and it certainly looks as if the $1245 level is offering short-term resistance. However, there is a certain amount of demand near the $1238 level, so while it continue to go a bit lower, that it is a slow descent that is probably going to see. The US dollar has its part to play, so if it starts to strengthen, that will put bearish pressure on gold as well. Economists believe that the currency markets will continue to be very noisy, and with interest rates rising in the United States, it’s very likely that Gold will continue to struggle to make longer-term gains, at least at the moment. Market players believe that it will eventually see a turnaround, but it’s probably closer to the $1200 level where the longer-term players come into put money to work.

Highlights

Gold prices edged up on soft Dollar ahead of Fed speech

Higher U.S interest rates tend to boost the dollar, in which the metal it is priced

The dollar plays a crucial role in determining gold’s direction, as a stronger dollar makes gold more expensive for holders

The U.S Dollar Index that tracks the dollar against a basket of six major currencies was unchanged at 94.48

Gold normally rises as the dollar falls, as the precious metal is denominated in the U.S currency

Fundamentals

Gold prices edged higher today as the dollar remained on the backfoot ahead of U.S Federal Reserve Chairman Jerome Powell’s first congressional testimony. Markets will be interested to see if Powell makes any comments about global trade tensions and how it would affect the rate outlook going forward.

Spot gold was up 0.25 percent at $1,243.18 an ounce, while U.S gold futures for August delivery were up 0.3 percent at $1,243.20 an ounce. Investor appetite for gold is not very strong at the moment.

Asian stocks weighed by a sharp decline in crude oil prices, and the dollar slipped 0.1 percent against major peers as investors awaited Federal Reserve Chairman Jerome Powell’s first congressional testimony for any clues on the pace of U.S interest rate rises.

Demand for gold in top consumer China has been weak as an ongoing trade war with United States had weakened the local currency and affected investor sentiment, with prospects of pick up further dented after data showed slowing growth in the economy.

Dollar was steady against major peers. Powell takes his upbeat view of the US economy to Capitol Hill, with markets and many of his colleagues expecting two more interest rate increases in 2018 amid a continued economic expansion.

The narrowing gap between yields on long-term and short-term Treasury bonds to little more than equivalent of one rate hike from the Fed has helped sour at least one U.S central banker on any further interest rates increases.

The precious metal was under pressure in recent weeks by investors’ favour of the dollar over gold surrounding the impact of a U.S-China trade war. Escalating and sustained trade conflicts following U.S tariff actions threaten to derail economic recovery and depress medium-term growth prospects.

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IGI Securities Limited – Commodity News

Karachi, July 17, 2018 (PPI-OT): Gold

Technical

Gold markets initially rallied to start the week, but ran into trouble at the 50 hour EMA. The slope of the moving average is lower, and it certainly looks as if the $1245 level is offering short-term resistance. However, there is a certain amount of demand near the $1238 level, so while it continue to go a bit lower, that it is a slow descent that is probably going to see. The US dollar has its part to play, so if it starts to strengthen, that will put bearish pressure on gold as well. Economists believe that the currency markets will continue to be very noisy, and with interest rates rising in the United States, it’s very likely that Gold will continue to struggle to make longer-term gains, at least at the moment. Market players believe that it will eventually see a turnaround, but it’s probably closer to the $1200 level where the longer-term players come into put money to work.

Highlights

Gold prices edged up on soft Dollar ahead of Fed speech

Higher U.S interest rates tend to boost the dollar, in which the metal it is priced

The dollar plays a crucial role in determining gold’s direction, as a stronger dollar makes gold more expensive for holders

The U.S Dollar Index that tracks the dollar against a basket of six major currencies was unchanged at 94.48

Gold normally rises as the dollar falls, as the precious metal is denominated in the U.S currency

Fundamentals

Gold prices edged higher today as the dollar remained on the backfoot ahead of U.S Federal Reserve Chairman Jerome Powell’s first congressional testimony. Markets will be interested to see if Powell makes any comments about global trade tensions and how it would affect the rate outlook going forward.

Spot gold was up 0.25 percent at $1,243.18 an ounce, while U.S gold futures for August delivery were up 0.3 percent at $1,243.20 an ounce. Investor appetite for gold is not very strong at the moment.

Asian stocks weighed by a sharp decline in crude oil prices, and the dollar slipped 0.1 percent against major peers as investors awaited Federal Reserve Chairman Jerome Powell’s first congressional testimony for any clues on the pace of U.S interest rate rises.

Demand for gold in top consumer China has been weak as an ongoing trade war with United States had weakened the local currency and affected investor sentiment, with prospects of pick up further dented after data showed slowing growth in the economy.

Dollar was steady against major peers. Powell takes his upbeat view of the US economy to Capitol Hill, with markets and many of his colleagues expecting two more interest rate increases in 2018 amid a continued economic expansion.

The narrowing gap between yields on long-term and short-term Treasury bonds to little more than equivalent of one rate hike from the Fed has helped sour at least one U.S central banker on any further interest rates increases.

The precious metal was under pressure in recent weeks by investors’ favour of the dollar over gold surrounding the impact of a U.S-China trade war. Escalating and sustained trade conflicts following U.S tariff actions threaten to derail economic recovery and depress medium-term growth prospects.

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