Analyst says it could be a ‘blow-out’ week for gold By Barbara Kollmeyer and Carla Mozee, MarketWatch MADRID (MarketWatch) — Gold futures pared some of their earlier gains on Monday as the dollar retook some ground, but signs that hedge funds have been moving back into the market were acting as a support for the metal. Meanwhile, a big week for central-bank meetings and economic data could prove pivotal for the metal, said one analyst. Gold for December delivery GCZ3 +0.64% rose by $7.90, or 0.6%, to $1,329.30 an ounce on the Comex division of the New York Mercantile Exchange. Gold for August delivery GCQ3 +0.64% rose $7.70, or 0.6%, to $1,329.60 an ounce. Futures earlier got a boost from a falling U.S. dollar. But the ICE dollar index DXY +0.16% rose to 81.714, with the currency gaining across the board. A weaker U.S. unit can help dollar-denominated gold prices by making them cheaper for holders of other currencies. Support for gold remained, though amid news that speculative investors sharply increased their net long gold positions for the third week, in the week to July 23, according to analysts at Commerzbank. “In so doing, they contributed considerably to the roughly $100 increase in the price of gold observed in the two last reporting periods,� said Commerzbank analysts in a note. Speculative net long positions have hit their highest level in six weeks and nearly tripled within three weeks on a historical basis. But the analysts said gold could trade sideways until the Federal Open Market Committee meeting announcement on Wednesday. A packed week of updates for the market also includes the first reading of second-quarter gross domestic product in the U.S., manufacturing data from major gold consumer China, and monetary-policy decisions from the European Central Bank and Bank of England. The Fed’s message should “remain markedly dovish,� as the central bank has said “monetary policy must remain accommodative for an extended period, and the gradual tapering of purchases will not imply the beginning of a restriction, but rather ongoing stimulus at a slower pace,� Intesa Sanpaolo economist Giovanna Mossetti wrote in a report Friday. On Wednesday, figures are expected to show the U.S. grew just 1% in the second quarter, down from 1.8% in the first three months of 2013. On Friday, the Labor Department may say the U.S. economy created 175,000 jobs in July and that the unemployment rate dipped to 7.5% from 7.6%, according to economists polled by MarketWatch. Peter Hug, global trading director at Kitco Metals Inc., said it could definitely be a “blow-out� week for traders this week, given so much data and events are on tap. “Given the thin market, I would expect a catharsis week, that will break the market from its consolidation pattern,� he said in emailed comments. “I suspect the status quo from the FOMC and EU releases as the market feels higher, but a momentum break above the recent $1,337 level is required,� said Hug. “A stall again here will encourage the bears to try the downside, possibly with conviction.� The August and December gold contracts last week each rose 2.2%, and over the past three weeks, prices for the most-active contracts rose nearly 9%, according to FactSet data. Monetary stimulus from the Fed and other central banks to aid economic growth has been credited for pushing gold prices higher in recent years. Silver for September delivery SIU3 +0.53% rose 10 cents, or 0.5%, to $19.87 an ounce. Silver finished higher last week, by 1.6%. Read: Some analysts see the $20 level as a good buy. September copper HGU3 -0.11% lost 1 cent to $3.10 a pound. Prices last week fell roughly 1% on concerns about the risk of lower demand from China, the biggest user of the metal. October platinum PLV3 +1.69% jumped $20.50, or 1.4%, to $1,443.30 an ounce. The move followed last week’s decline of 0.6%. September palladium PAU3 +1.71% rose $8.65, or 1.2%, to $732.65 an ounce after finishing last week lower by more than 3%. Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @MWBarbaraKollmeyer. Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.

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