Gold & Silver News | October 6th

Gold wiped the year’s gains this week as it fell under the USD$1200 level, after US employers added more jobs in September than forecast, strengthening speculation that the Federal Reserve is getting closer to raising interest rates. Gold is now trading near its lowest level in nine months this week while silver has fallen to its lowest since 2010.

Gold and Silver Bullion Snapshot 

Gold and Silver Bullion Weekly Charts

Gold and silver markets fell at the start of the week and by Friday, gold managed to break under the USD$1200 level as US non-farm payroll numbers were released and higher than expected; driving the US dollar higher. By the end of the week, bullion for immediate delivery was last trading at USD$1,216.24 (AUD$1402.09) an ounce, down from USD$1,215.81 (AUD$1401.59) on Monday. Gold futures for December delivery fell by 1.8% to USD$1,192.90 (AUD$1375.18) an ounce on Friday afternoon on the New York Comex. Meanwhile Silver futures for December delivery fell 1.3% to USD$16.826 (AUD$19.40), capping a fifth straight weekly loss.

Gold’s drops further indicate how the metal has lately fallen out of favor, as the US equities reached a record last month, the dollar surged and inflation remained low. Bloomberg reports that holdings in global ETPs are at their lowest in five years, while open interest in Comex futures and options is also near their lowest since 2009.

Charlie Bilello, who director of research at Pension Partners LLC states that gold is suffering under a strengthening America’s economy, causing investors to shun gold despite geopolitical threats such as the US’s expanded sanctions against Russia and ramped up military campaign against the Islamic State in Iraq, as well as rising interest rates. He went on to say that the yellow metal generally only offers returns through price gains, meaning the strong US dollar is limiting demand^[1].

Walter Hellwig from BB&T Wealth Management stated that there are “a lot of headwinds for gold prices right now, because it’s hard to find any inflation, and the dollar has been so strong”^[2]. Meanwhile, FX Empire claimed that the market will continue to go lower, towards the USD$1000 level, considering it a seller’s market where gold will be ‘hammered’^[3]. Goldman Sachs also maintained its forecast for prices to reach USD$1,050 (AUD$1210.44) in 12 months.

For the week ahead, Kitco suggested bearish movers could put pressure on the December 2013 low of USD$1,180 (AUD$1360.31), and June’s low of USD$1,179.40 (AUD$1359.62)^[4]. Meanwhile for silver it reports September 23rd’s USD$17.99 (AUD$20.74) high as a possible resistance, while bearish targets at USD$17.50 (AUD$20.17) and then USD$17.08 (AUD$19.69)^[5].

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