FS: Comex on uncertain footing ahead of FOMC meeting
Orlando, Florida 13/12/2013 - It was a choppy week for the gold market as a powerful but all-too-brief short-covering rally on Tuesday was followed by fresh liquidation after the US budget deal was announced on Thursday.
Gold prices for February delivery on the Comex division of the New York Mercantile Exchange was last up $3.30 at $1,228.00 an ounce. Trade has ranged from $1,219.50 to $1,233.70.
On Thursday, the US House approved a bipartisan federal budget plan to avert a government shutdown in the next two years; however, the plan did not address entitlement spending or corporate taxes. The US debt ceiling was not raised either, so there could be another political stare-down in February, Sharp Pixley noted.
“The removal of this uncertainty has lessened the appeal of gold as a safe haven,” Sharps Pixley said. “Expected near-term Fed tapering and the retrenchment of the largest gold consumer, India, due to its government's import curbs are the two big factors hurting gold prices this year. In the longer-run, the reduction in QE, which is expected to be gradual, and the very low real interest rate, are positive factors for gold.”
In yesterday's data, US retail sales rose by a stronger-than-expected 0.7 percent in November compared to a 0.6 percent gain; however, weekly new jobless claims disappointed, spiking higher to 368,000, above the expected rise to 321,000.
“The good retail sales data, combined with the US budget deal, is putting gold under pressure. Furthermore, as mentioned in the Focus section, physical demand is not pushing the price higher either,” Standard Bank said.
“These developments will add pressure on gold and silver and could entice new short positions into the futures market. From a tactical perspective, we still believe that gold should be sold into rallies,” the broker said.
The highlight of next week will be the two-day Federal Open Market Committee meeting, which kicks off Tuesday. Some believe that the Fed may start to taper off its quantitative easing programme, currently worth $85 billion per month; however, market consensus is that they will keep the policy unchanged this time around and will instead act in January or March.
Other upcoming data includes global manufacturing PMIs, starting with China's HSBC flash reading over the weekend, followed by the European and US equivalents on Monday.
As for the other precious metals, Comex silver prices for March delivery was last up 7.2 cents at $19.525 an ounce. Trade has ranged from $19.280 to $19.630.
“With the sharp washout and extensive range down action yesterday, silver probably saw another wave of speculative liquidation from non-commercial and non-reportable accounts,” analysts from The Hightower Report, said.
“Eventually, silver prices will need clear views of sustained global growth, at least a minor whiff of inflation and more positive leadership from gold to shut off the liquidation pattern and attempt to climb up and away from the $1,900 level,” the analysts said.
Platinum prices for January delivery on the Nymex was last down $1.10 at $1,363.30 an ounce, while the most-actively traded palladium contract was at $723.50 an ounce, up $3.25. - See more at: http://www.fastmarkets.com/gold-news/68298-0-en#sthash.DZRrukkz.dpuf
