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Gold bullion markets volatile

Monday, November 28, 2016

Gold rose in early trading today (Monday) following a fall in the price of the precious metal which reached its lowest point in more than nine months, thanks to the strength of the US dollar. 

However, the US currency has this week lost some of its value against a basket of global currencies, helping propel gold bullion higher. 

At 09:48 this morning (Monday 28 November), gold was valued at £958.58 per troy ounce, rising by around £10 since the market’s opening. 

ANZ analyst Daniel Hynes told Reuters: “The dollar strength has eased somewhat and we may be seeing some buying interest re-enter the market.

“There has been some heavy selling over the past couple of weeks, so there may be a touch of technical-based buying.”

Gold has suffered in recent weeks as the market bets on expansion and growth under President Elect Donald Trump, which is likely to lead to inflationary pressures. 

The almost universal forecast that the US Federal Reserve will raise the cost of borrowing at December’s meeting has also affected sentiment for the precious metal. When the cost of borrowing is higher, the value of gold tends to fall and vice versa. 

Meanwhile, the Indian gold markets have reopened for business after being closed for 16 days as part of the government’s investigation into alleged profiteering and tax evasion.

The Indian government has been carrying out the surveys after demonetarising high value notes. On the reopening of the markets, both the gold and silver prices dipped. 

The global gold market is likely to be an interesting one to watch over the coming weeks, with the combination of the new President Elect, the US Federal Reserve meeting, and action on the Asian markets all having an impact.

The greater volatility that is now being seen in the world markets could make this an opportune time to buy gold. After the almost constant high prices experienced earlier in the year, there may be opportunities for bargain hunters who were wary of investing at the top of the market.

Opportunity for bargain hunters as gold price hovers around half-year lows

Monday, November 21, 2016

Physical gold buyers looking for a bargain helped the gold price bounce back in early trade today (Monday November 21) after the precious metal fell to its lowest value in five and a half months at the close of last week.

Following a strong year of rising prices, now may be the time to buy, as gold has lost 5.4 per cent of its value during November. Analysts pointed to jitters in the market surrounding the US Presidential election and firm forecasts that the US Federal Reserve will raise interest rates at its December meeting.

ANZ analyst Daniel Hynes told Reuters that the price may slip further in the run-up to the interest rate setting meeting.

He added: “The low prices have induced some interest in the physical market. However, the dollar has got some momentum behind it and until a turnaround, it is going to be difficult for gold prices to recover.”

Gold had been expected to gain in value following the election of Donald Trump as the next US President, due to his lack of political experience. However, according to Motley Fool, his economic policies to increase growth via lower taxes and infrastructure spending have pushed investors away from the precious metal in the weeks after his victory over Hillary Clinton.

In today’s trade, gold bounced back from Friday’s low of £971.66 per troy ounce to £977.95 at 09:15 this morning. Buying in the Asian market overnight helped bullion to claw back some ground.

India, the world’s second biggest gold-buying nation, has withdrawn higher value currency notes from circulation, leading to concerns the government may reduce the amount of bullion being imported. That’s led to a surge in buying physical gold by jewellers.

With prices currently among the lowest the market has experienced for some time, it may be worth investing now to take advantage.

Gold makes gradual gains after falling to five-month low

Monday, November 14, 2016

Gold began to recover some ground this morning (Monday November 14) after closing last week at its lowest price in five months.

The precious metal fell to a low point of £966.86 per troy ounce at 05:15 this morning but had begun to claw back gains to be valued at £978.04 per troy ounce by 08:45.

Bullion’s lacklustre performance last week is because of the strengthening dollar and widespread forecasts that the US Federal Reserve will increase the cost of borrowing at its December meeting. 

Jeffrey Halley,senior market analyst at OANDA, told Reuters: “The rate hike in December is an absolute done deal now.”

Gold had been widely expected to make gains after the shocks sent through the global markets by the election of Donald Trump as US President. Investors were expected to flock to buy bullion due to its traditional strength as a safe haven investment in turbulent times. 

Indeed, it rose to £1,005.63 per troy ounce in the early hours of Wednesday morning as it became apparent Trump was going to win.

However, Halley said: “What we're seeing today is the continuation of long liquidation going through the market.

“People seem to have unwound their Trump-risk and are now talking more about ‘Trumpflation', with Trump's fiscal policies that he wants to enact with all this infrastructure that would push up inflation and that would push up borrowing rates and yields in the States.”

Analysts are now expecting Mr Trump’s election to lead to the cost of borrowing rising faster than had been anticipated. The Fed’s chair, Stanley Fischer told the markets on Friday that growth prospects are now strong enough to handle a gradual rise in the cost of borrowing. 

Generally, when interest rates rise, it signals a steady economy and the gold price falls as investors opt to put their money in more risky ventures instead of the safe haven that the precious metal provides.

US election drama tipped to lead to rapid rise in gold price

Monday, November 7, 2016

The gold price is set to be the winner this week, no matter who emerges victorious from the US Presidential Election. 

The market is expecting a race to the safe haven commodity, with the gold price forecast to rise by as much as $200 if Republican candidate Donald Trump wins, and by $100 if his Democrat rival Hillary Clinton is elected. 

Bron Sucheki of Monetary Metals told ABC: “Gold is a classic asset class that investors run to when there's any uncertainty. I think the US election sure meets the definition of uncertainty if ever there was one.

"The uncertainty isn't just about the election outcome, but even after the election, how will the new president deal with the potentially hostile Congress and whether they'll be able to get their policies through."

He predicted that the rush to buy gold would not just be from Western buyers but the traditional large bullion buying countries of China and India will also increase their spending on the precious metal.

This morning, (Monday 7 November), the gold price was £1,036.86 at 09:15, down from last week’s high of £1,062.01, which it hit on Wednesday (November 2). If the analysts are correct, there should be a rapid jump in the price as the market gets into its swing. It’s worth keeping an eye on gold’s value if you are looking to buy or sell today, to try to find the optimum moment to make your deal.

However, gold’s gains on the back of the US Election are predicted to continue after the drama of the election itself. Independent analyst Saul Eslake believes if Mr Trump is elected, the economic uncertainty will increase and is likely to lead to a drop in the value of the dollar and a rise in the value of safe haven gold.