"Quick Play" These Developments Could Raise The Gold Price To Higher Levels - News-Credit-Mortgage-Coin

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Sunday, November 22, 2020

"Quick Play" These Developments Could Raise The Gold Price To Higher Levels

 



Famous Kitco writer Anna Golubova announced today the catalysts that can increase the price of Gold to high levels.


Golubova's highlights are as follows:


Is the gold market stuck in a zero-sum game as positive vaccine news is offset by a high level of concern due to rising corona virus cases?

What ING Analysts Say

ING strategists said, “Investors continue to reassess the risk of tighter containment measures against the optimistic expectations of a vaccine. "This dilemma could be a zero-sum game for the markets right now, and we can see risk sentiment face more stability as we go to Thanksgiving on Thursday in the US," he says.


This week saw massive gold-backed ETF outflows outweighing the precious metal. However, the market held the ground at the critical $ 1,850 / ounce level and managed to close the week in a slightly more positive way. December futures were trading at $ 1,872.30, up 0.58% on the day.


Standard Chartered precious metals analyst Suki Cooper says, "Gold prices have been under pressure since the positive vaccine announcement on November 9, but prices have found support in dips below $ 1,865 / ounce, at least for now."


However, Peter Hug, global trade director for Kitco Metals, said, “Today's upward movement is a pattern that includes short positions. People don't want to stay in shorts on the weekends. Sales usually start on Monday, ”he says.


Still, Hug said he would rather remain in the Long position next week than short-focused gold. However, he warned that the trade will be weak next week due to the Thanksgiving holiday and stressed that investors should be prepared for extreme volatility. "When you have a weak market you can get a lot of volatility," says Hug.


A similar view was expressed by Afshin Nabavi, senior vice president of precious metals trader MKS SA. "There is more potential in the opposite direction next week," says Nabavi.


Another week has passed when the price of gold stuck in the $ 1,850 to $ 1,900 range. Nabavi said, “It's been a hectic week. However, we did not go out of the trading range at the end of the day. “Next week's range is between 1,850 - 1,900”.


And, according to analysts, the precious metal currently doesn't have a catalyst powerful enough to raise it higher or lower it.


The biggest and most likely factor that could push gold above $ 2,000 is incentives, according to Hug. “The market is still waiting for a catalyst. $ 1,850 from tech support still shows flexible support. The catalyst will be an incentive and may not arrive until January. ”


The Biggest Risk for Gold: The Speed ​​of ETP Refunds

Cooper warned that, until further incentives are available, the most significant risk for gold is the speed of exit of gold-backed traded products (ETP).


“THE BIGGEST RISK FOR GOLD PRICES IS THE SPEED OF ETP NET FAILURES, ONE OF OUR BASIC MONITORING FACTORS. IN PREVIOUS CORRECTIONS, modest net outputs of 20 tons were seen. EVEN, OUTPUTS HAVE EXCEEDED 50 TONS FOR THE MONTH NOW, AND IT IS ON THE WAY SINCE. "


Hug stated that as corona virus cases increase to record levels, government shutdowns could increase the urge to get people out of gold and switch to cash. “When you get that kind of uncertainty, human nature will go to cash. That's why you are seeing purging of some metal positioning, ”he added.


More closures in the US could help incentives come out faster. Still, ING warned economists that the additional damage they cause could be dangerous to the economy.


“WITH THE INCREASE OF COVID CASES ACROSS THE US, WE SEE MORE STATES ANNOUNCED NEW LIMITATION MEASURES. IN PLACES SUCH AS MICHIGAN, WISCONSIN AND CALIFORNIA, OTHER STATES SAYING THAT RESTAURANTS / BARS, SPORTS HALLS AND WORSHIPS ARE FORCED TO CLOSE TO THE STREET / ORDER TO STAY. THESE MEASURES POSSIBLE TO SPREAD TO OTHER STATES BUT IF EVIDENCE FROM EUROPE MAY NOT BE ENOUGH TO LIMIT THE LAST WAVE OF THE VIRUS. HISTORICALLY, THE INCREASED HOSPITAL ADMISSION RATE AFTER THE NEXT WEEK GOOD HOLIDAY, WHICH IS A TIME FOR FAMILY MEETINGS, CAN ACCELERATE MORE AGGRESSIVE MEASURES THAT WILL BE MORE HARMFUL FOR THE ECONOMY. "


Investors entering gold and silver in March still have profits of approximately $ 300, respectively. “As markets get stronger and not broken, people start getting impatient and start taking money off the table,” said Hug. This is also true for the stock market. So, most of them invest money in bonds for security; some are returning to the stock market, ”he says.




Daniel Pavilonis, senior commodity broker at RJO Futures, added that he did not think there would be a break in the price of Gold until "a solid commitment to obtain a major incentive" came.


Gold Trade in Long Position


Cooper said that gold investors who want to stay in a long position, at least in the medium term, continue to see price drops below $ 1,860 an ounce as a buying opportunity.


Hug also noted that any weakness in the gold market offers medium and long-term investors an opportunity to add to positions.

Walsh Trading co-director John Weyer said there is a chance for gold to drop to $ 1,820 an ounce next week, adding:

"WE STILL THAT IT CAN COLLECT TO $ 1,820. AFTER THAT, WE MAY SEE A RISE OF OVER $ 2,000 IN JANUARY-FEBRUARY. WE NEED SOMETHING THAT MAKES US OUT OF THE THIN RANGE. "


Powell with Mnuchin

Markets are also trying to absorb the dispute between US Treasury Secretary Steven Mnuchin and Federal Reserve Governor Jerome Powell.


Mnuchin wrote to the Fed on Thursday asking that "unused funds be returned to the Treasury." This means that the core epidemic loan programs the Federal Reserve uses to support businesses, nonprofits and local governments will expire on December 31st. In response, the Fed issued a statement saying that the "full package" of measures must be maintained.


Hug said this could hurt the stock markets in the short term.


Data to track

Although it's a short week due to the holiday, the US will see a number of data from the November meeting, including FOMC meeting minutes and updated third-quarter GDP data on Wednesday.


Other important figures to consider are the CB consumer confidence on Tuesday, as well as jobless claims, the PCE price index and Wednesday's orders for durable goods. In addition, markets will track Black Friday sales figures to measure consumer spending during the severe epidemic.

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