Kaloti Precious Metals-Morning Market Report-Thursday, December 08, 2016

Market Daily & Weekly

Note: Indications only, open and closing prices are bids; Data source: Bloomberg; Times as per Dubai

Fundamentals and News

Weaker dollar pushes gold higher

• Gold futures for February delivery increased 0.6% at $1,177.50 per troy ounce on the New York Mercantile Exchange on Wednesday.

• The US Dollar Index was down 0.3% at 90.87. Generally, a softer dollar tends to bolster gold, which is priced in U.S. dollars and becomes cheaper to foreign buyers when the dollar declines.

• Gold prices are still down, now by 15%, from earlier highs this year.
• Investors have now withdrawn gold from Exchange Traded Funds (ETF) for 18 consecutive days.

• The belief that the Federal Reserve will increase interest rates soon is also a factor weighing on the minds of investors in gold and silver.

• The Fed is planning to raise interest rates, it is widely held, because after a decade of stagnation, the U.S. economy is finally generating stronger growth. The fed's Janet Yellen is said to want to contain inflation with a pre-emptory interest rate increase that will keep wages and prices in line.

• Gold prices in Asia eyed data sets from Japan and China for direction on Thursday after posting overnight gains.

• Elsewhere in precious metals trading, silver futures for March delivery jumped 2.28% overnight to $17.193 a troy ounce, while copper futures for March delivery last traded weaker traded at $2.647 a pound.

• In Japan, third quarter GDP is expected to show a 0.6% gain quarter-on-quarter and a 2.4% pace year-on-year. Later, Australia reports trade balance data for October with an A$800 million deficit seen. China should report its trade balance for November with a surplus of $46.30 billion seen and exports posting a decline of 5.0% and imports down 1.3%.

• Overnight, gold prices edged higher on Wednesday, but gains looked likely to remain limited as expectations for an interest rate increase by the Federal Reserve next week weighed on the precious metal.

• Gold remained under pressure ahead of an expected interest rate hike by the U.S. central bank at its Dec. 13-14 meeting with a stronger dollar also hitting sentiment as the precious metal is priced in greenbacks.

• Data on Tuesday showing that U.S. factory orders rose at the fastest rate in almost one-and-a-half years in October added to signs that the manufacturing sector is recovering and fed into expectations for a rate hike.

 Data Forthcoming Releases

Courtesy: http://kalotipm.com.sg/kaloti-market-report-8th-december-2016