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Looking to Seasonal Support for Gold Prices

The U.S. Comex gold futures dropped 2.94% this week to end at $1,254.60 on Thursday, compared to -1.47% in the S&P 500 Index, -0.19% in the Euro Stoxx 50 Index, and -2.33% in the crude oil futures. During Asia's Friday morning, the gold futures traded up about five dollars. The Dollar Index has hardly changed this week and finished at 94.782 on Thursday.

U.S. Confidence Soars
The Fed has raised its assessment of the U.S. economy, describing the improvement as “solid” rather than “moderate”. The U.S. weekly jobless claims fell to the lowest level since April 2000 while the Bloomberg comfort index surged 2.6 points to a five-year high. Although the ECB will start its QE in the next couple of months, the near-term stabilization of the Euro Dollar and a pause in the U.S. Dollar rally can support the gold prices at this level.

Gold Sentiment has also Jumped this Year
The U.S. gold-backed ETP holdings surged $1.9 billion month-to-date to 28 January, according to Bloomberg. The Indian government has also put in a proposal in its budget to cut the import duty on gold by eight percent to two percent, which will boost the gold consumption in India. The seasonal demand for gold is turning up in China and India as well as the investors’ interests.

What to Monitor
We will monitor the U.S. Q4 preliminary GDP and the consumer spending on 30 January. We will also monitor the January flash manufacturing PMI for China, the final manufacturing index in January for the Eurozone and the U.S., and the U.S. December Core PCE price index on 2 February, the Eurozone December PPI on 3 February, the Bank of England interest rate and asset purchase decisions on 5 February as well as the January U.S. non-farm payrolls and the U.S. unemployment rate on 6 February.

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30 Jan 2015 | Categories: Gold

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