Vang SJC

Yesterday (12/1), the gold price declined slightly, closing at $1,086.17/ounce, down 0.64% compared with the opening price of $1,093.94/ounce, amid US economic indicators were published and the speeches of the vice President, Mr. Stanley Fischer has reinforced expectations of Fed rate hike.

Analysis of the causes of the fall in gold prices If24h here.

Fundamental Analysis

Fundamental Analysis

After the first 2 days of this week, gold lost 1.5% , moved away from a peak of 2 weeks, at $1.112/ounce amid the market focus to the times the Fed raised interest rates as well as low fuel prices.

Today (13/1), the China trade balance was announced, causing surprise to the market because the trading value reached 382 billion yuan, exceeded expected at 339 billion yuan, higher than previous month at 343 billion yuan. The total value of Chinese exports increased by 2.3% (in yuan) in December, after falling 3.7% in November. Higher exports in December could be a temporary effect, due to the seasonal nature at the end of the year, the weaken yuan supported exports but this effect will soon fades away.

The impressive trade report of China sooth fears of the investors about the instable currency, leading to a rebound in Asian stock markets, which curved the demand of safe-haven assets like gold.

The US crude oil inventories will be monitored today.

The data shows changes of crude oil reserves in the commercial business last week, thereby, revealing the inflation and US economic growth. Experts predicted the oil inventories rise by 1.9 million barrels in December 4th – 8th week, higher oil supplies put pressure on price which is already at the bottom since 2003 at below $30/barrel.

12/1, WTI crude for delivery in February fell $1.76 to $ 29.93 / barrel, before closing at $ 30.44 / barrel. Many experts said $20/ barrel was not too surprised because of the low demand from emerging markets.

 Energy Information Administration (EIA) cut its forecast for 2016 WTI down 24%, at $ 38.54/barrel. According to the short term report, it is difficult for crude oil to recover until 2017.

 The disappointing fundamentals on energy market would trim gold demand cause the risk of inflation is not in the forseeable prospect.

2:00 am tomorrow, GMT +7, or 2:00 pm in the US session, the Beigh Book report will be published, it is a summary of the expert comments at the Fed branches about the US economy. Federal Reserve Banks will collect economic information from the director of the commercial banks, interviews with major businesses, as well as comments from economic analysts. All of this information is synthesized, analyzed to support FOMC decision at the next meeting.

The positive report will support the greenback and put weight on gold price.

Besides, the Federal budget balance – the difference between revenues and expenditures of the federal budget in December, was also announced. Positive data would strengthen the dollar.

Thus, the prospect of the Fed raising interest rates become the center of attention this week, when the US economic data continue to strengthen confidence of the investors about of timing of the Fed’s rate hike.

Technical Analysis

Technical Analysis

Currently, at 15:51, GMT +7, gold is trading at $1,080.66/ounce, down 0.5% compared with opening price of $1,086.85/ounce.

In early Asian trading, gold prices  was down from resistance 23.6 at $1,087.95 level/ounce. Prices broke consecutive resistance yesterday and continued crashing down.

Now price is hitting resistance $1.080/ounce. According to calculations, the gold price fluctuated from a peak of 2 weeks at$1.112/ounce and tank to $1,085.95 / ounce on Monday, a significant reduction as the investors expected Fed raising interest rates.

RSI (14) Index on the H1 chart is  33.65 level, above 30 (overbought level) confirms the downtrend of the precious metal.

Sentiment Analysis

Sentiment Analysis

In the current session, there are bearish 8 candles and only 2 bullish candles, suggests selling power is still dominating. The  candle steps are small and steady, the shadows lengthen downwards, which indicates that selling power are slow because important indicators haven’t been published.

Then, next candle, having body longer than others, which said the selling power start to be stronger.

Markets prepare to witness disappointing performance of oil in the short term. Psychology waiting also covered the market, as investors become “detective”, monitoring carefully the movements about the US economy. Fed is expected to raise interest rate in March this year as the indicator of inflation become clearer.

The balance of portfolio is towards Dollars because of higher interest rates. Political risks and financial markets around the world are gradually decreasing, in favor of the move to tighten and the evolution of the economy. Accordingly, the demand for gold as a safe haven asset seems to be fading.

Risk

Risk

Movements from financial markets as well as low risk appetite may the Fed to raise interest rates.

Stable US job market will only be achieved one of two tasks of  Fed, is a necessary condition but not enough to conduct the Fed to raise interest rates the next time. Inflation is a difficult problem when commodity prices and energy prices are low.

For the balance of trade China, exports increased by 10.8% in 2015, which raised concerns about the reliability of data and the relative recovery in the country’s foreign trade. The government in 2013 announced data has been amplified by the business transaction price differences. Thus, the market has not really stabilized as traders said, investors would still consider buying gold as collateral.

Falling oil prices may damage to the countries of Saudi Arabia, OPEC may convene a meeting in order to provide solutions to reduce supply in order to push the oil price up. Once the price is supported to go up, gold was considered to be essential assets for each investor as  inflation rises. Furthermore, oil prices rises again to bring surplus value for the energy company. Cash flow will move into the stock market and push the dollar down. Therefore, gold may take advantage of lower dollar and go up.

Market Commentary

Today, gold prices tend to fall, it’s predicted gold prices to hit $1.070/ounce amid Beige Book reported positive figures and US oil inventories increased.

However, as discussed in the section Risk, gold prices could turn upward, hitting $1.090/ounce.

Analysis of Group If24h

Linh Nhan