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Gold Traders Turned Bullish Ahead of Next Week’s U.S. Payroll Data

The U.S. Comex gold futures fell 0.52 percent in the past two days but are still up 1.22 percent week-to-Thursday. The gold futures traded as high as $1,432.90 on Wednesday. During Friday morning in Asia, the prices traded lower at around $1,404. The S&P 500 Index rose 0.47 percent in the past two days after falling almost two percent on Monday and Tuesday. The Euro Stoxx 50 Index rebounded 0.57 percent on Thursday after plunging almost three percent in the first three days of the week. The U.S. Dollar Index rose 0.72 percent so far this week and surged 0.63 percent to 81.948 on Thursday. The crude oil futures fell to $106.98 on Thursday after reaching a high of $112.24 the day before.

Higher Revised U.S. Growth and Headwind to Emerging Markets
The U.S. real GDP expanded at a revised annualized rate of 2.5 percent in Q2 from the initial estimate of 1.7 percent while the prices excluding food and energy rose at an annualized rate of 0.8 percent. The labour market shows more strength as the weekly jobless claims fell 6,000 to 331,000, compared to 372,000 at the end of last year. The U.S. is expected to grow 2.5 percent in 2H 2013 as the sequestration effects wane. The Dollar Index jumped to a four-week high while the U.S. 10-year Treasury yield touched 2.8287 percent on Thursday from a low of 2.7032 percent during Asia’s Wednesday morning, bringing the concern of tapering to the forefront again. As a result of the U.S. bond yield increase, capital flew out of emerging markets and caused countries such as Brazil and Indonesia to raise interest rates and sell dollars to defend their currencies, further slowing down growth.

Gold Traders Have Turned More Bullish
According to the CFTC, the managed money short positions dropped 13 percent while the long positions rose about eight percent during the week ending 20 August. The net position at 73,216 contracts is the highest since 5 February. Geopolitical uncertainty, rising inflationary pressure from the oil price increase, and rebounding gold-backed ETP holdings have led to an increase in demand for gold. 

What to Watch
Next week, we will monitor the August final PMI index for China, E17 and the U.S. on 3 September, the final Q2 GDP for E17 on 4 September, the interest rate decisions of the Bank of Japan, the Bank of England, and the ECB on 5 September as well as the August U.S. non-farm payrolls and unemployment rate on 6 September, ahead of the all-important 17-18 September FOMC meeting.

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30 Aug 2013 | Categories: Gold

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