Gold Could Trade Sideways as it Contends with Currency Moves
London (Sept 6) Gold could trade sideways next week, with the precious metal expected to take its cues from currency moves.
As many as eight of 22 analysts polled in a Kitco Gold Survey said they expected gold prices to trade higher next week, while nine predicted that prices will drop, and five forecast prices to trade sideways.
A stronger US dollar next week will further dent the yellow metal's safe-haven status.
Colin Cieszynski, senior market strategist at CMC Markets told Kitco: "The… US dollar is overbought technically, and the economic news and central bank speculation that has been pushing it higher should fade next week, enabling gold to respond to the big increases coming to the ECB balance sheet between the September targeted LTRO (long-term refinancing operation) and ABS (asset-backed securities) purchases starting in October."
Richard Baker, editor of Eureka Miner, said: "Oil, gold and copper had a down week even with ECB president Mario Draghi's surprisingly accommodative monetary announcement; the red metal suffered the least, down a fractionally, but oil and gold were off more than 1.5% in early morning trading compared to last Friday's close.
"This continues a theme of falling gold prices against a backdrop of broadly declining commodities. The (S&P GSCI), which covers everything from copper to cattle, is remains only slightly above its 52-week low.
"Without a geopolitical reason to bounce higher, gold will likely retest this low. My target for next week is $1,260 per ounce," Baker added.
Gold Ends Lower
US gold futures for delivery in December finished 80 cents higher at $1,267.30 an ounce (£776, €978) on 5 September.
But prices were down 1.6% for the week as a whole as geopolitical tensions eased – Ukraine and pro-Russian separatists struck a tentative ceasefire deal.
Spot Gold inched up rose 0.4% at $1,266 an ounce on 5 September.
The euro plummeted to a 14-month low against the greenback earlier in the week after the European Central Bank (ECB) unexpectedly cut rates.
Source: ibTimes.UK
