Gold Silver Reports (GSR) – Should You Buy Gold Now? Here’s What Experts Say — Several factors could limit gold’s upside potential for now. On the news front, last week ended with a stronger-than-forecast U.S. jobs report for May, with unemployment continuing to fall but wages rising more than expected, pointing to inflation risks, the bank says. “The U.S. Fed is likely to see this as confirmation that its cycle of rate hikes is appropriate,”
“We expect the next rate hike at the Fed’s upcoming meeting next week, which should keep the gold price in check until then.” Further, analysts continue, some of the European political uncertainty has eased now that a government has been formed in Italy and the leadership transition appears to have taken place smoothly in Spain. Also, U.S. President Donald Trump says an on-again, off-again summit with the leader of North Korea now will take place after all. “This has also slowed demand for gold as a safe haven,”.
CME Group: May Metals Volume Rises 25% From Year Ago
Exchange operator CME Group reports that metals volume averaged 674,000 contracts per day in May, up 25% from 540,000 in May 2017. Average daily volume in gold futures and options grew 34% to 447,000 contracts, while the same for copper was up by 38% to 117,000 contracts. Metals volume averaged 680,000 contracts daily for the three months ending with May. This compares with 685,000 for the three months ending with April, 713,000 for the three-month period ending with March and 662,000 for the period ending with February.
Gold prices have been moving within a range for the past few weeks. Traditionally considered a safe-haven investment, gold prices usually shine in in times of geopolitical uncertainty. For example, investors not confident of capital market investments at a certain time move to gold, and vice versa. Fears of US-China trade war and hopes of a rate hike by Federal Reserve – the US central bank – have kept gold prices in a range. In the domestic market, gold prices have stayed around Rs. 31,000-31,750 since April, data shows. During this period, global gold prices have quoted between $1,350 and $1,310 per ounce.
Last Friday, gold prices had hit their lowest since May 23 at $1,289.12. Back home, gold prices dived by Rs. 300 to Rs. 31,600 per 10 grams, extending their slide for the third straight day at the bullion market. Sluggish local demand from jewellers coupled with weakness in international market put pressure on domestic gold prices, say traders.
Rate hike probability in June meeting by US Fed and stronger dollar are major trigger for gold prices to fall in 2018, said Prathamesh Mallya, chief analyst for non-agri commodities and currencies, Neal Bhai Reports . Near term outlook for gold remains negative, with $1,240 and $1,360 being two possible points on the lower side and higher side respectively, he said. “The bias remains lower only.”
US job growth accelerated in May and the unemployment rate dropped to an 18-year low of 3.8 per cent, underpinning expectations that the US central bank will raise interest rates this month. Higher interest rates discourage the buying of non-interest-paying bullion, which is priced in dollars.
FUNDAMENTALS REPORT
✅ Spot gold was nearly unchanged at $1,293.06 per ounce by 0111 GMT. It touched the lowest since May 23 at $1,289.12 an ounce in the previous session.
✅ U.S. gold futures for August delivery were down 0.2 percent at $1,297.10 per ounce.
✅ U.S. job growth accelerated in May and the unemployment rate dropped to an 18-year low of 3.8 percent, pointing to rapidly tightening labor market conditions, which could stir concerns about inflation.
✅ The Federal Reserve should continue to raise rates gradually over the next two years, a U.S. central banker said on Friday, with higher borrowing costs perhaps beginning to act as a brake on growth starting early next year.
✅ Finance leaders of the closest U.S. allies vented anger over the Trump administration’s metal import tariffs on Saturday, ending a three-day meeting with a stern rebuke of Washington and setting up a heated fight at a G7 summit next week in Quebec.
✅ China warned the United States on Sunday that any agreements reached on trade and business between the two countries will be void if Washington implements tariffs and other trade measures, as the two ended their latest round of talks in Beijing.
✅ Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 1.25 percent to 836.42 tonnes on Friday from 847.03 tonnes on Thursday.
✅ Hedge funds and money managers raised their net long position in COMEX gold contracts to the strongest since late April in the week to May 29, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.
✅ Gold demand in most Asian centres remained sluggish last week with prices stuck in a tight range, while an inauspicious period for buying the yellow metal dampened demand in major consumer India.
✅ U.S. hedge fund Paulson & Co, led by long-time gold bull John Paulson, is set to name a group of investors that will work together to try to drive changes and better returns from gold mining companies after years of dismal industry performance, according to people familiar with the situation.
✅ Ghana’s gold output rose to 2.805 million ounces in 2017, up 10.2 percent from the previous year, data from the Ghana Chamber of Mines showed on Friday.
Gold has traditionally been used as means of safe investment compared with other asset classes. Experts suggest refraining from buying gold on the basis of sentiment alone. While physical gold provides high liquidity, demat gold investment options such as gold ETFs (exchange-traded funds) and sovereign gold bonds (SGBs) provide price consistency, say financial planners. – Neal Bhai Reports
