Gold and Silver Price Market update Sept 15th

Despite some rebound activity last week, gold continues an overall downward track, reaching a 8 month low, while the white metal also has been trading down, nearing three-month lows, in the wake of lessening of geopolitical tensions, expectations of diverging monetary policies and the rise in the US dollar contributing to the weaker tone. Kitco news reports that analysts predict prices to further weaken next week.

Gold and Silver Prices Snapshot (Sept 8-12th) as at 1700EST:

December gold futures fell on Friday, settling at US$1,231.50 (AUD1,361.90) an ounce on the New York Comex Exchange, down 2.8% for the week. On the technical front, this can also be seen as a result of a breach of the USD$1240.20 support level on Thursday; Gold has fallen through bottom of the USD$1,240-$1,330 an-ounce range that had held for several months^[1]. Meanwhile December silver did rise slightly by Friday, settling at USD$18.599 (AUD20.57) an ounce, but was still down by 2.8% for the week. Bullion has fallen 6.8% since June, heading towards the first quarterly loss for the year. Despite geopolitical tensions such as sanctions against Russia and the escalating military activity in the middle east, investor interest in bullion has remained mostly flat. The lack of geopolitical influence and overall weak trends in gold and silver have been speculated to be driven by the strengthening US dollar and economy.

Will Gold and Silver Prices Dropped Further?

Most analysts currently predict gold prices to drop further. Bob Haberkorn, a senior commodities broker with RJO Futures, said gold is likely to further dip on the back of a strengthening US dollar^[2]. Charlie Nedoss, senior market strategist at LaSalle Futures Group, said gold’s close under $1,240 (AUD1371.70) earlier in thw week was a bearish sign. Further, he said the strength of the US dollar is weighing on gold demand: “the dollar is strong, [interest] rates are rising and while the stock market is softening, it is at record highs… The only thing gold had going was food and energy inflation, but that’s been taken away”. In addition, while geopolitical tensions have had limited impact on gold, the move towards Scottish independence has also strengthened the greenback compared to the sterling and euro, further increasing the weighing of the US dollar on gold demand.

In Australia ANZ, also forecast the gold price to plunge further, predicting $US1180 (AUD1305.32) by the end of the year but to slowly return in 2015^[3], with ANZ analysts saying demand from China remains lacklustre.

As reported by Forbes, next week’s Federal Open Market Committee meeting is expected to drive gold and financial markets, as well as future US monetary policy^[4].

By Lisa Casagrande | https://www.goldbullionaustralia.com.au