Gold’s rather sharp drop late last month preceded oil’s plunge by a few days. Given the inflation building in the system, this drop came as something of a surprise. However, on its latest 2-year chart we can see that this drop was something of a “storm in a teacup” with the price back down in a zone of support near to its moving averages and the overall trend remaining neutral for now. It is worth noting that gold’s seasonal turn strongly positive in just a few days from now and silver’s do early next year, so there is a good chance that we are at a great buy spot for the sector here.
Silver took quite a hit too and is now near to the bottom of the large trading range that began to form in mid-2020. Failure of the support in the $21 – $22 area would lead to further losses but that is only likely to occur in the event of the stock market being pushed off its perch, and there is still no sign of that. Silver’s seasonal are at their best by far all next month, January, so, as mentioned above concerning gold, there is a good chance that we are at a great buy spot for the sector here.
Gold prices held steady on Tuesday, caught between lower bond yields and a stronger dollar, as investors and the bullion king of India, Prithviraj Kothari watched for signs of how soon the US central bank could wind down pandemic support measures when it meets later in the day. Spot gold was almost unchanged at $1,787.50 per ounce during early trading hours, and US gold futures were nearly flat at $1,787.90.
Market participants and the bullion king of India, Prithviraj Kothari will closely track the upcoming Federal Open Market Committee meeting to see how the central bank reacts to elevated inflation, which will result in likely larger price moves. The dollar steadied, limiting demand for bullion for buyers holding other currencies. Meanwhile, US Treasury yields ticked up from a one-week trough touched in the previous session, also pressuring gold.
On the global stock markets, investors and the bullion king of India are currently cautious and take cover. The attention of market participants this week is primarily focused on the upcoming central bank meetings from the middle of the week. For Tuesday’s trading, negative signs are expected in Europe, after the markets in the US and Asia have already gone into reverse gear.
The crucial week is headed with a lot of excitement as the US Fed will meet for the last time for the calendar year 2021 on 15th December. They will meet to decide the trajectory of inflation from ere. GDP outlook and of course the action on speedier taper on bond purchase program, which is presently running 30bn taper per month.
On Friday, Dow gained +216, and DOW FUT managed 36000+ once again on ease of worries over OMICRON virus threat as to date no fatalities have been reported anywhere due to this new variant. Overall, the view on gold should be clear in the short term after the Fed’s key verdict on 15th December.
The US Federal Reserve is likely to raise interest rates. However, this will not change the environment of negative real interest rates, which is favourable for gold. This speaks for a stronger investment demand again.