Gold Prices "Recovering" But Move "Sideways" Ahead of "Auto-Pilot Fed" and US Jobs Data

[The Machine]

 

 

GOLD PRICES held in a tight range again on Tuesday morning in London, fixing at $1307.50 per ounce – unchanged from last week's finish – as European stock markets also moved sideways ahead of this week's key US data releases.

 

Wednesday brings US GDP for Q2, plus the latest Federal Reserve policy statement.

 

Friday then brings the latest US payrolls data – often a key moment of volatility in the gold price.

 

The US Dollar rose Tuesday, pushing the Euro down to its lowest level of 2014 so far.

 

US Treasury bond yields fell as prices rose, but German Bund yields fell faster, hitting new record lows on the 10-year at 1.13% per year – less than half the yield now offered on comparable US debt.

 

Gold prices are trading "sideways" says Australian bank ANZ "as the market awaits [that] swathe of data from the US."

 

But "once the usual five minutes of [Non-Farm Payrolls] fun is out of the way," says London broker Marex Spectron's David Govett, "I don't really see gold prices deviating from the ranges they are currently in.

 

"I can see very little coming out from the Fed that will disturb the tranquillity" on Wednesday, he adds.

 

"The Fed is pretty much on 'autopilot' at the moment," agrees Germany's Commerzbank in a commodities note. But "any surprising phrasing in [Wednesday's] press release could well spark more dramatic price movements in the wake of the meeting."

 

Meantime, "gold has sold off to and is recovering from its 200-day moving average at $1286," says Commerzbank's technical analyst Karen Jones in the bank's weekly chart book.

 

"We look for the [gold price] to remain under pinned here and resume its ascent towards the 2013-14 resistance line at $1362.92 during the summer."

 

More neutral on gold prices, "The yellow metal is consolidating above strong support at $1280.52," says a note from Swiss bank UBS, pointing to the 62% retracement of the June-July advance from $1241 to $1335 per ounce.

 

Major trust fund holdings of gold bullion to back exchange-traded shares were unchanged Monday, with the SPDR Gold Trust (NYSEArca:GLD) steady at 801 tonnes – down some 40% by weight from the peak of end-2012.

 

Open interest in US Comex gold futures and options increased very little as the August contract ended the day unchanged.

 

In the physical gold market meantime, the London Bullion Market Association – trade body for the world's wholesale center – said it has been asked to help gather and review proposals for developing the 100-year old daily Gold Fix process.

 

Pooling their resources to enable clients to deal any size, four bullion banks – working as the London Gold Market Fixing Limited – currently meet by phone at 10.30am and 3pm to find the one single price which clears the most business.

 

"The bullion market needs, initially, to concentrate on the London Silver Price implementation," says LBMA chief executive Ruth Crowell, welcoming the LGMFL's request and pointing to the Silver Fix replacement set to start two weeks Friday.

 

"We look forward to focusing on gold from late August," Crowell adds, saying the new Gold Fix process will likely be chosen in September to be implemented fully by year-end.