METALS OUTLOOK: Gold Market Looks To September Jobs Data
By Debbie Carlson of Kitco News
Friday October 18, 2013 2:10 PM
(Kitco News) - With the U.S. government reopened and delayed economic indicators starting to be released, gold market participants said they’re looking ahead to the September U.S. nonfarm payrolls data, set for release Tuesday.
The September report should have been released on Oct. 4, but it was delayed because of the government shutdown.
Gold prices rallied this week with the bulk of the gains coming on Thursday, following a last-minute congressional deal to fund the government until Jan. 15 and raise the debt ceiling until Feb. 7. That decision sparked widespread ideas that the Federal Reserve won’t consider embarking on its tapering of quantitative easing until March at the earliest.
December gold futures fell Friday, settling at $1,314.6 an ounce on the Comex division of the New York Mercantile Exchange, but up 3.7% on the week. December silver fell Friday, settling at $21.913 an ounce, up 3% on the week.
In the Kitco News Gold Survey, out of 34 participants, 25 responded this week. Of these, 10 see prices up, while seven see prices down and eight see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Gold market watchers said after the strong volume see on Thursday, trading activity on Friday was much lighter and several said that might be reflected in a hesitancy to put on positions going into Tuesday’s September jobs report. That’s especially true after the $40.70 price gain scored just on Thursday.
“We really don’t know what to expect out of payrolls because we haven’t had any data and that’s why volume is light,” said Jim Comiskey, senior account executive for Archer Financial Services.
Analysts from Nomura said they expect total nonfarm payrolls to rise 180,000, and based on improving jobless claims figures, they forecast that the unemployment rate will fall by 0.1 percentage point to 7.2% in September.
Comiskey said he’s in a wait-and-see mode in gold right now. Bulls can point to strong Chinese demand for gold and silver and the likelihood that the Fed is on hold with reeling in its quantitative easing program for now, he said. However, he added, on the bearish side, December gold futures are finding it difficult to rise above stiff technical chart resistance at $1,329 to $1,333.50.
He said what he plans to do is to “be a buyer on the dips and if we can break through $1,337.80, I’d be an aggressive buyer with a view it might go to $1,370s.”
There’s definitely a split view on the short-term direction for gold between market participants, and several said they’re waiting until after the jobs data is revealed to put on positions. Some said they are watching the action in the U.S. dollar, which fell sharply after the government reopened and helped gold rally.
Among those who said they see gold prices holding gains is Tom Philippides, broker at Capfeather Brokerage Group. He said the genesis for gold’s recent strength was Tuesday’s price action. On Tuesday, December gold set a two-month low in the $1,250s area and rebounded into the close, which he said was a reversal on technical chart, opening the chance to rally. The move above the $1,290s area negated gold’s downtrend, he said.
Longer term, he said, with the Fed likely to continue with its quantitative easing program, gold should gain. How high could it go? “I believe in a range with $1,500-$1,581 being the most outrageous upside potential,” he said.
He added later that “a settle below $1,273.60 for me, would prove all this wrong, and gold would continue the slide down. I would be amazed if it did,” Philippides added.
There are still a number of market watchers who said they believe gold’s downtrend is intact. Daniel Pavilonis, senior commodities broker at RJO Futures, said he expects a retest of $1,300. He said the movement in both gold and the U.S. dollar was more about “rebalancing” of positions than a change in sentiment.
He agreed that the Fed’s quantitative easing program will likely continue, but he doesn’t see that the stimulus has supported metals versus other markets. “Stocks are up. QE has been less helpful for gold and silver, while S&Ps are making new highs. There’s less need to hedge with metals,” he said.
By Debbie Carlson of Kitco News
Friday October 18, 2013 2:10 PM
(Kitco News) - With the U.S. government reopened and delayed economic indicators starting to be released, gold market participants said they’re looking ahead to the September U.S. nonfarm payrolls data, set for release Tuesday.
The September report should have been released on Oct. 4, but it was delayed because of the government shutdown.
Gold prices rallied this week with the bulk of the gains coming on Thursday, following a last-minute congressional deal to fund the government until Jan. 15 and raise the debt ceiling until Feb. 7. That decision sparked widespread ideas that the Federal Reserve won’t consider embarking on its tapering of quantitative easing until March at the earliest.
December gold futures fell Friday, settling at $1,314.6 an ounce on the Comex division of the New York Mercantile Exchange, but up 3.7% on the week. December silver fell Friday, settling at $21.913 an ounce, up 3% on the week.
In the Kitco News Gold Survey, out of 34 participants, 25 responded this week. Of these, 10 see prices up, while seven see prices down and eight see prices sideways or unchanged. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Gold market watchers said after the strong volume see on Thursday, trading activity on Friday was much lighter and several said that might be reflected in a hesitancy to put on positions going into Tuesday’s September jobs report. That’s especially true after the $40.70 price gain scored just on Thursday.
“We really don’t know what to expect out of payrolls because we haven’t had any data and that’s why volume is light,” said Jim Comiskey, senior account executive for Archer Financial Services.
Analysts from Nomura said they expect total nonfarm payrolls to rise 180,000, and based on improving jobless claims figures, they forecast that the unemployment rate will fall by 0.1 percentage point to 7.2% in September.
Comiskey said he’s in a wait-and-see mode in gold right now. Bulls can point to strong Chinese demand for gold and silver and the likelihood that the Fed is on hold with reeling in its quantitative easing program for now, he said. However, he added, on the bearish side, December gold futures are finding it difficult to rise above stiff technical chart resistance at $1,329 to $1,333.50.
He said what he plans to do is to “be a buyer on the dips and if we can break through $1,337.80, I’d be an aggressive buyer with a view it might go to $1,370s.”
There’s definitely a split view on the short-term direction for gold between market participants, and several said they’re waiting until after the jobs data is revealed to put on positions. Some said they are watching the action in the U.S. dollar, which fell sharply after the government reopened and helped gold rally.
Among those who said they see gold prices holding gains is Tom Philippides, broker at Capfeather Brokerage Group. He said the genesis for gold’s recent strength was Tuesday’s price action. On Tuesday, December gold set a two-month low in the $1,250s area and rebounded into the close, which he said was a reversal on technical chart, opening the chance to rally. The move above the $1,290s area negated gold’s downtrend, he said.
Longer term, he said, with the Fed likely to continue with its quantitative easing program, gold should gain. How high could it go? “I believe in a range with $1,500-$1,581 being the most outrageous upside potential,” he said.
He added later that “a settle below $1,273.60 for me, would prove all this wrong, and gold would continue the slide down. I would be amazed if it did,” Philippides added.
There are still a number of market watchers who said they believe gold’s downtrend is intact. Daniel Pavilonis, senior commodities broker at RJO Futures, said he expects a retest of $1,300. He said the movement in both gold and the U.S. dollar was more about “rebalancing” of positions than a change in sentiment.
He agreed that the Fed’s quantitative easing program will likely continue, but he doesn’t see that the stimulus has supported metals versus other markets. “Stocks are up. QE has been less helpful for gold and silver, while S&Ps are making new highs. There’s less need to hedge with metals,” he said.
