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Gold price awaits OPEC outcome

The gold price took a step back from $1,200 per ounce on Thursday, despite weakness in the dollar, with onlookers likely to be eyeing the results of the OPEC meetings for a gauge in sentiment.

Spot gold was once again stuck below $1,200 and was last seen at $1,195.00/1,195.80 down $1.80 on the previous close,- albeit up from session a low of $1,185.80, with the metal trading within a $14 intraday range.

“Gold is stuck either side of $1,200 with a break of $1,190 or $1,205 needed for the next leg in either direction,” MKS said in a note.

This comes despite the dollar showing further signs of weakness in Wednesday afternoon trading, following a spate of poor macro-economic announcements, which brought the dollar as high as 1.2530 against the euro, though it has since retreated slightly to 1.2472.

Mitigating further gains in the dollar, was further indications from the European Central Bank that it is considering buying up sovereign debt in an effort to stimulate the bloc’s economy.

During a speech yesterday, ECB Vice President Vitor Constancio said that the central bank will consider sovereign QE next quarter, should the current stimulus fail to reinvigorate the economy and help the bank meet its balance sheet targets.

Market consensus has long been that any pricing in relation to any potential money printing programmes in Europe have already been priced in. However, further signs of eurozone weakness will play straight into the dollar’s hands and could cause issues for gold prices.

Today, however, onlookers will be keeping a close eye on the results of the OPEC meeting, where a failure to reach a consensus on oil production cuts could have long-term negative implications on commodities sentiment in general.

“We think that should the cartel walk away with no agreement, pressure will likely mount on crude prices once again, possibly driving gold prices down with it,” INTL FCStone said in a note. “However, acting as somewhat of a counter-balance, is the fact that the dollar is weakening lately, as macro releases out of the US have been coming in worse than expected over the last few days.”

Onlookers will also be looking to take up positions ahead of the Swiss referendum on gold on Sunday 30 November, although polls indicate that support for the ‘yes’ campaign is waning and most traders appear to have shrugged off the vote as a foregone ‘no’ conclusion.

In data today, the Spanish flash CPI at -0.4 percent fell short of expectations while the HPI at -0.2 percent was as predicted and the German unemployment change at -14,000 impressed.

Elsewhere today, the M3 money supply in the eurozone was as expected at 2.5 percent, although private loans figures fell short at -1.1 percent.

Still to be announced, the German preliminary CPI and GfK consumer climate figures this morning, as well as a speech from ECB president Mario Draghi to close out the day, with the US away on their Thanksgiving holiday.

In the other metals, silver remains range bound at $16.38/16.43, down 11 cents, while platinum at $1,219/1,224 and palladium at $795/800 are both down $4 respectively.

Mine Web
Published on:
November 27, 2014
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