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Gold price set to hold strong

Wednesday, August 1, 2012

Analysts are predicting gold prices could stay at their current range of $1,550 an ounce support and $1,600 resistance, with little evidence to force values on the live gold price chart in a new direction.

August’s most active gold contract on the Comex division of the New York Mercantile Exchange settled at $1,582.80, down 0.58% for the week, while September silver settled at $27.302 an ounce, down 0.25% on the week.

Of 22 respondents to the Kitco gold survey, 10 participants see prices up, six see figures down, while six are neutral. The survey, of bullion dealers, investment banks, futures traders, money managers and technical-chart analysts, reveals a non-commital attitude amongst market watchers towards precious metals for the next week.

While some analysts suggest the annual summer slump will see gold hold in its current range on the live gold price chart, averaging strong support at $1,525, there are others who indicate external influences could see gold push the upside of its current trading range.

“We likely favour the upside in gold over the very short term,” Edward Muir Commodities Consultant at INTL FCStone, told Kitco News. “If for no other reason than the fact that the strength in grains and oil should lead to generally more buying in commodity indices, which in turn should benefit relative laggards like precious and base metals.”

With much of the American Midwest gripped by drought and high temperatures, the U.S grain markets, in particular the Chicago Board of Trade corn and soybean futures, have been feeling the pressure. Prices have been pushed to all-time highs; corn futures are up roughly 48%, soybean futures up about 35% since mid-June, leaving some market watchers nervous of a return to the food inflation and crisis of 2008.

Although there has not yet been any mention of trade restrictions, market commentators are still concerned for the impact on a stagnant economy. “On the growth front, we’re worried about the global impact of the sudden, substantial and ongoing increases in soft commodity prices,” suggested Nomura analysts to Kitco News. “This may take a few months to feed through but comes at a particularly unwelcome time as global manufacturing, capex (capital expenditures) and jobs growth are slowing.”

Others believe the live gold price chart will see gold withstand the pressure. “The grains are a beast of their own with the weather,” said Bob Haberkorn, Senior Commodities Broker with the RJO Futures.