Thursday, October 01, 2015
Gold prices seemed to have stabilized in recent weeks, trading range-bound for the most part. Prices have had fairly large session ranges, but neither the bull nor bear camp has been able to win out, resulting in consolidation on the daily chart. Equity prices seemed to have stabilized for the time being, and the US Dollar has been fairly range-bound, giving the precious metals market little to work with from an outside influence standpoint.
Traders, in general, have a case of Fed fatigue, waiting for the eventual tightening of interest rates from the central bank. While the FOMC's decision to not raise rates in its September meeting could be viewed as positive for metal prices, the reason for not doing so could be viewed as equally bearish. Board members do not feel confident enough in the economy to raise rates at this time. This suggests that inflation could be tame for the foreseeable future, however, the long-term inflation outlook starts to come into play the longer the Fed keeps kicking the can down the road. The ADP jobs report showed the private sector adding 200,000 jobs for the month of September. Many traders will be keeping a close eye on the Non-Farm Payrolls report on Friday to see if it follows suit. China's stock market woes could boost physical demand for Gold as a safe-haven investment at a time where some miners are trimming production. Exports of the metal from Hong Kong to the mainland have reached 1,891.90 tons so far in 2015. Through the same period last year, this is an increase of 560.9 tons.
Turning to the chart, we see the December Gold contract trading in a tightening range between the low 1100s and the 1150s. A breakout out of this range may signal a near-term direction for prices. Currently, the oscillators are sitting at neutral levels.
Rob Kurzatkowski, Senior Commodity Analyst