After a much stronger-than-expected U.S. employment
report, market analysts said they will keep an eye out for further
proof of economic strength in the U.S., with the February retail sales
seen as a harbinger. Market watchers have been looking for signs so
see whether the higher taxes in the U.S. have pinched consumers’
spending habits.
Additionally, participants are keeping an eye
on the $1,550 to $1,560s an ounce area for Comex April gold futures
after the market held support in this region. April gold futures ended on firmer Friday,
settling at $1,576.90 an ounce on the Comex division of the New York
Mercantile Exchange, rising 0.293%, on the week. Most-active May silver
ended higher on the day, settling at $28.948, up 1.61% on the week.
In the News Gold Survey,
out of 33 participants, 25 responded this week. Of those 25
participants, six see prices up, while nine see prices down, and 10 see
prices moving sideways or are neutral. Market participants include
bullion dealers, investment banks, futures traders, money managers and
technical-chart analysts.
Gold initially fell after a much
stronger-than-expected U.S. unemployment report for February. According
to the Labor Department, 236,000 jobs were created last month and the
unemployment rate fell two percentage points to 7.7%, a five year low.
Several analysts said that the data suggest
the initial worries about tax hikes and spending cuts that went into
effect in January might not have scared off employers. Also, others
pointed out the increase in construction jobs matches the strength in
housing data, which has also come in stronger than expected.
Gold found support just above last month’s low
of $1,554 and rebounded when stocks sold off following a rise in
wholesale inventories but held much of the session just above
unchanged.
Rich DeFalco of 76 Partners said the jobs
figure was a game-changer for him and his view on gold. “If you had
asked me yesterday, I would have said up. Today, I’m totally bearish.
There are too many things working against it. That unemployment number
was shocking,” he said.
He said with U.S. Treasury yields and the U.S.
dollar rising on the economic news, some of the market events that
have been supportive for gold aren’t anymore. “It’s the opposite of the
last three to four years,” he said.
After strong employment and jobs data, market
watchers said next week the critical report will be retail sales as
that will give a sense of how Americans are spending – or not – money
in the face of higher taxes and gasoline prices. MarketWatch calls for a
rise of 0.4% in retail sales.
DeFalco isn’t so sure, especially with higher
gas prices. “With gas prices near $4 a gallon, it cuts into people’s
disposable income… People don’t have as much to spend on
entertainment. (Winston) Churchill said ‘we drink in victory and we
drink in defeat’ but we don’t drink as much when gas is $4 a gallon,”
he said.
Gold analysts said they’re going to keep an
eye on Asian buying, which traditionally has been a strong support for
gold. Volumes on the Shanghai Gold Exchange are strong, although
premiums have fallen. UBS said the fall in premiums may be the result
of easing of some supply bottlenecks, rather than reduced demand.
“Should volumes remain strong in the days and
weeks ahead, this would mean that this year China is forgoing the
historical pattern of a slowdown in gold activity after the Lunar New
Year. March is typically a strong month in terms of gold trading on the
SGE,” UBS said.
Analysts said they’ll also watch the
resumption of Indian wedding season in April to see what the appetite
for gold is after recent strength in the rupee.
Frank Lesh, futures broker at FuturePath
Trading, said it’s possible that gold could continue to hold in this
range as it mulls its next direction.
“Gold has spent the past week in
consolidation, unable to penetrate resistance of $1,590, but able to
hold above the low of $1,554 from two weeks ago. The technical picture
is still negative, but at least the liquidation pressure has subsided,
for now. Dollar strength and the perception that QE (quantitative
easing) could end sooner - due to the improving economic picture -
rather than later remain limiting factors for gold. It was investment
demand that took this market to contract highs and I continue to wonder
what catalyst will bring that demand back. I expect a sideways market
and further consolidation for next week,” he said.
Contact Us:
Asad Rasheed
Direct:04-3841906
Email:asad@cfb.ae
Email:info@cfb.ae
For more information please visit our website: www.cfb.ae
News Source: www.reuters.com
Here is another blog that provides regular news and information and is very useful to stay updated
on the markets... http://century-financial-brokers-uae.blogspot.ae/
The opportunity to profit from the world’s largest market...
No comments:
Post a Comment