Vang SJC

Yesterday (11/1), gold plunged moderately, closed at $1,094.02/ounce, losing 0.8% compared with the opening price of $1,103.45/ ounce. Gold price fluctuated between $1,108.36 – $1,093.44/ounce as the dollar continued to be strengthened after satisfactory jobs report .

All the causes have been analysed specifically here.

Fundamental Analysis

Fundamental analysis

Fundamental Analysis

While investors are still waiting for the release of the data, after 2 days of losses incurred an average of 0.1%, gold remains an counter-weight of the back green as demand for gold stalled on the release of the U.S jobs report.
Today, these 3 following indicators related to U.S economy will be the keynote of the market.

The Small Business Optimism Index is compiled by the National Federation of Independent Business (NFIB) each month by surverying its members which are small company (1-250 employees) on their plans and expectations of the economic conditions.

This index is estimated to reach 95.4 points, exceeding the previous month by 94.8 points and may help strengthen the dollar

The “Open Employment and Labor Turnover Survey” (JOLTS) index, surveyed by the US Bureau of Labor Statistics to help measure job vacancies.

This survey collects data from employers, including retailers, manufacturers and different offices every month. Survey includes qualitative and quantitative questions relating businesse’s employment, job opening, recruitment, hires and separations. This is a key point in making more comprehensive picture of the labor market.

According to the JOLTS index, 5.41 million addtional jobs is expected to be created, exceeding the previous month projection of 5.38 millions.

The Consumer Confident Index (CCI) conducted by IBD and TIPP reports the consumers’ degree of optimism on the economy conditions, including economy outlook in six months, personal finance and confidence in federal policies. Experts anticipated this month index would not reached the average threshold of 50 point, which, in turn would support the dollar, but should still be able to exceed last month’s at 47.2

It seems that even if the data is not thoroughly optimistic, Dollar would still overwhelm the market as investors studying movement of the indicators to make conclusions about the the economy of USA in the future, as well as to be more certain about the times of Fed hike.

Today, the market should become more active as Mr. Stanley Fischer, Fed’s vice chairman and a member of the Federal Open Market Committee (FOMC), is going to give a speech on monetary policy and finances. Earlier on January 3rd in San Francisco, California, Mr Fisher also mentioned measures to raise interest rates to 2%.

Yesterday, Atlanta Fed President, Dennis Lockhart said that there is not enough data on inflation in order to consolidate tightening until March this year.

Dallas Fed president, Robert Kaplan also mentioned that 4 hikes is not a sure thing in 2016, at lease amid the global stock volatility and weakening economy in China. Currently there is not enough data to meet the organization’s expectations, however,  investors and experts predicted there should be enough by March and it is likely the moment for Fed hike.


Therefore, the possibility of the Fed raising interest rates in near future is not too small, given a higher interest rate, dollar will push precious metals out of asset portfolio since they yield no interest.

Analysist of OCBC Bank, Barnabas Gan said: “I think  Gold may go down, touching $950 /ounce, due to the interest rate of 1.25 – 1.5% and a strong Dollar.”

Oil markets see prices dropped below $32/barrel for the first time since 2003. Crude has lost nearly 20% beginning this year. Oil  was pushed down by the impact from a stronger dollar and fear of economy deceleration from China lowers demand for oil. Experts are also expecting oil prices continue to fall further, may even hit a staggering $ 10 / barrel this year.

In additional, cheaper oil will weigh down price of precious metals as one advantage of keeping gold as a hedge against inflation has been void.


Financial volatility in global stock market as well as in China has made gold become a safe-haven for investors in the previous week. However, today Asian stocks rallied and the a stable yuan, resulted from the government effort has made gold less appeal. Moreover, the demand for safe haven assets tends to not last long.

Technical Analysis

Technical Analysis

Currently, at 15:55 GMT +7, gold is trading at $1,096.20/ounce, climbed 12.27% from the opening price of $1,093.94/ ounce.

In early Asia session, gold passed 23.6 resistance at $1,096.85/ounce, as confidence in the second largest economy has been diminished. In European however, gold slid below 23.6 threshold as the market was expecting the speech of Fed vice president.

Currently, bullish candles are being shown with long shadow upwards, indicating the market is on long position. Top of the shadow touched 38.2 threshold at $ 1,098.85 /ounce

Still, on 8/1, gold unexpectedly fell after the days of growth as positive data on US jobs was released. Today, more indicators will be published, providing further information of the economy health, gold price maybe affected.

Sentiment Analysis

Sentiment Analysis

There are 6 bearish and 4 bullish candles, the average body of bullish candles is higher than the average body of bearish ones. The buying pressure is prone to linked to demand for safe-haven assets while the selling pressure has more weight as investing in dollar now is also considered a safe investment. Besides, concern among investors about the economic indicators related to employment and consumption in the US market is also hovering.

The dollar strength is the shadow behind demand for gold as outlook of another Fed hike was taken into consideration.

The USA is still showing a careful approach, although there are certain turmoil in the stock market due to  the crisis from China, USA possitive outlook of  jobs market has become one of a “tripod” for this economy.

Risk

Risk

The negative US economic data could reverse the situation and in turn, support precious metal prices. Along with a slightly“dovish” statement of Fed officials may lead to the recovery of gold.

Growth in some areas in 2016 are bound to fall into recession and may create leverage for gold.
The market is also expecting the data on  trade balance of China which is to be announced tomorrow (13/1), the data may worry investors about China  deceleration.

Market Commentary

In US session today, trend of gold will become more noticeable. We predict prices will go down to the $1.084 /ounce if the US economic data is positive.

In case of risk, price will rebound at $ 1.105/ounce.

Analysis of Group If24h

Linh Nhan