Goud: vooruitzichten komende week........
Gold may be on the defensive next week as continued debt worries and economic weakness in Europe undermine the euro and lead to strength in the U.S. dollar, traders and analysts say.
The metal was higher for most of this week, but made a U-turn Thursday when the euro came under pressure following rate cuts by the European Central Bank and dovish comments from ECB President Mario Draghi saying economic growth remains “weak.” The single European currency remained under pressure Friday despite a weak U.S. employment report, in turn knocking August gold futures on the Comex division of the New York Mercantile Exchange to a one-week low.
The August gold contract lost $30.50 Friday to settle at $1,578.90 an ounce. The metal had a slight gain for the week after the first four days, but following Friday’s sell-off, ended up with a loss for the week of $25.30. September silver fell 75.2 cents Friday to settle at $26.92 and lost 69.2 cents for the week.
Gold initially benefited Thursday from monetary easing in China and the U.K., before turning south after the ECB rate cut and ensuing comments. The metal got only a brief reprieve Friday morning when the Labor Department reported that non-farm payrolls rose by 80,000 in June, short of expectations of around 100,000. The selling soon resumed as market participants turned to the dollar amid the global slowdown and since the U.S. data was not considered dire enough to prompt further Federal Reserve easing just yet.
Darin Newsom, DTN senior analyst, is among those who figure gold could remain on the defensive as the dollar retains a stronger bid. The single European currency fell as far as $1.2267 Friday, its lowest level in two years.
A muscular dollar hurts all commodities by making them more expensive in other currencies. Also, a firmer greenback reduces the buying of gold as a sort of alternative currency, and vice-versa.
“Based on the direction of the dollar heading into next week, I’m going to say gold is going to come under some pressure again next week,” Newsom said. “I don’t see any huge change in the perception of the euro or European economic situation, so I would anticipate the dollar staying firm.”
Spencer Patton, founder and chief investment officer for Steel Vine Investments, anticipates weakness in the stock market that underpins the dollar, thereby pressuring gold. He commented that the McClellan Oscillator for the stock market this week posted its most overbought reading in 1 ½ years.
“I believe the stock market is going to take a hit—today we’re already seeing it—through next week,” he said. “As you see stocks sell off, I think gold is going be brought down with it, chiefly in the face of a stronger U.S. dollar. Unfortunately, gold has become increasingly correlated to stock prices.”
Frank Lesh, broker and futures analyst with FuturePath Trading, looks for steady to lower gold. “We’ve got some strength in the dollar. That’s a problem for gold, has been and will be,” he said.
Gold has drawn some support on weaker U.S. economic data lately as some traders look at this as potential for more Federal Reserve easing, he said. Still, he said, the collective feeling in the market seems to be that policy-makers are not ready to undertake any more quantitative easing just yet.
“Gold is showing disappointment because of that, and we’ve got dollar strength that harms not only gold but most commodities of course,” Lesh said. “We don’t look for this dollar strength to go away any time soon because of what’s on in Europe.”
The U.S. economy has its problems as well, yet at the moment the foreign-exchange market is looking more favorably on the greenback than the eurozone currency. Lesh described the dollar as “the least dirty shirt” in a college dorm room, having the upper hand over the euro “by default.”
Ira Epstein, director of the Ira Epstein division of The Linn Group, also looks for the muscular dollar to hold gold back, but nevertheless sees the metal trading largely sideways next week. He expressed surprise at the declines the last two days, especially after easing Thursday in China, the eurozone and U.K. “Dollar strength is keeping people away from it,” he said.
There is a recognition that when central banks start easing, the cycle is likely to continue for a while. However, gold may be waiting for more cuts to spur economic growth and lead to price inflation, Epstein said.
“It’s not in a downtrend. It’s not in an uptrend. It seems to be stuck between $1,530 and $1,620, unable to extend out of those areas,” Epstein said. “We’re stuck in a $90 range….It’s looking for momentum.”
Gold is starting to enter a seasonally strong period when it rallies into year-end ahead of a number of gift-giving holidays around the world. “But that does not mean it has to pick up and run today,” Epstein said. “You can get a series of false starts.”
Daniel Pavilonis, senior commodities broker with RJO Futures, also looks for gold to be range-bound. “It’s in a congestion pattern,” he said.
Many in the market keep scrutinizing economic data and any comments from Federal Open Market Committee members for clues on whether there will be more quantitative easing in the U.S.
“I think gold is eventually going to move much higher, but it’s not going to be on QE,” Pavilonis said. “It’s going to be on the fact that our economy deteriorates so much that they can’t do any more QE because it won’t help the problem. There will be a true flight to quality out of the currencies and into gold….It’s going to be more of an organic interest as opposed to just quantitative-easing interest. But for the time being, I think it’s going to stay sideways.”
Mike Daly, gold and silver specialist with PFGBEST, looks for gold to bounce from support in the area around $1,580. He blamed Friday’s sell-off on profit-taking.
“We’re dipping to some support,” he said. “If we continue to hold here, we might have a little buyback next week.”
By Allen Sykora