Fundamental Forecast for Gold: Bullish
- Gold Vulnerable as ETF Holdings Lag Price Gains
- Dovish FOMC Pushes Gold to New Record High
Gold prices continued to edge higher last week, touching a new record high of $1300 in Friday’s trade. The yellow metal seems to reflect the shaky climate prevailing across financial markets more than any other trading instrument. Indeed, short-term correlation studies show only tenuous links between gold and most other benchmark assets as investors bank on its store-of-value properties amid continued uncertainty about global growth and inflation trends. In fact, gold ETF holdings rose to a record-high 67.2 million ounces last week.
Looking ahead, next week’s economic calendar promises plenty of scheduled event risk to keep markets engaged in the debate about the depth of the likely slowdown on tap in the second half of the year and its implications for the recovery at large. US releases remain of central concern as the health of the world’s largest consumer market remains a proxy for worldwide performance. The final revision of second-quarter GDP figures is expected to confirm previous estimates of a 1.6 percent annualized increase in the three months through June, but timelier indicators offer a mixed picture. Personal Income is set to tick higher for the second month while Personal Spending matches the largest increase in four months in August. However, it’s tough to feel sanguine about such results considering Consumer Confidence is due to decline in September having advanced in the preceding month, hinting the gains in income and spending may not prove lasting. On balance, September’s ISM outcome may prove to define the trading week, with the report set to show US manufacturing growth has faded to the slowest pace in 10 months.
Beyond the States, the Tankan Survey of sentiment among Japan’s export-sensitive manufacturers will offer a reading on the vitality of global demand, with expectations pointing to relative optimism on the forward-looking Outlook gauge and a continued acceleration in capital expenditures. China’s Manufacturing PMI will serve much the same purpose, with forecasts calling for the pace of industrial-sector growth to rise for the second consecutive month in September. While seemingly encouraging, these outcomes may not prove to meaningfully underpin optimism considering the murky US economic landscape coupled with signs of European slowdown evidenced the last batch of PMI figures and the steady slide in the Baltic Dry Index – a measure of international trade activity – which finished last week at the lowest in over a month.
On balance, it seems the path of least resistance points toward a continuation of gold’s gradual ascent, with conflicting economic data flow seemingly assuring steady investment demand as markets remain wanting of trend-defining clarity on the medium-term path of global growth.
0 comments:
Post a Comment