Vang SJC

Yesterday (15th June), gold price went up as dollar weakened and Greece’s crisis loomed. The price jumped to $1,190.32 before closing at $1,181.1/ounce. The price increased by 0.5% from the open price of $1,180.75/ounce.

At the moment, the gold is traded at $1,184.09/ounce at 3:14pm GMT+7.

Today, gold price is likely to decline due to the following reasons:

  • Gold seems to lose its appeal as hedge funds decrease their bullish bets by 35%. According to Commitment of Traders Report (COT) published by CFTC in the week ended in 9th June, gold speculator lift their bearish positions by 31%, up to 8.2 million ounce (233.5 tonnes) from last week. Meanwhile, hedge funds and central banks are more interested in bond. Bond sell-off plunged to 36,579 contracts, the lowest since October 2014. Central banks keep buying more U.S. Treasury.
  • Some economists said that Grexit is not a problem. On Monday, the president of European Central Bank (ECB), Mario Draghi stated that European economy is showing sign of recovery. He also said that effort has been intensified to rescue Greece; however, the indebted country needs to show their willingness. Greek drama sparkles hope and European economy improves may dampen gold’s appeal.
  • FOMC meeting discussing liftoff will be held on Wednesday. Janet Yellen’s statement may strongly affect gold market. Investors tend to wait cautiously before the policy meeting; therefore, gold price is not likely to jump.
  • After the gaining streak recently, a lot of investors may take profit and close orders before Fed’s meeting. Gold market may face some volatility.
  • SPDR Gold Trust’s holdings is at record low level since 2008 (701.9 tonnes), which means investors are abandoning the precious metal.

Nevertheless, gold price may edge up because of the following reasons:

  • Greece’s negotiation has not seen any breakthrough. Greek finance minister, Yanis Varoufakis, said that there would be no new proposal in the meeting in 18th June. With Greece hardening their position, it is questionable if a deal is reached in time. Amid standoff, investors may move to heaven assets such as gold.
  • U.S. Industrial production unexpectedly fell by 0.2% in May, because of slowing manufacturing and mining and spending cut on energy sector. Weak data may raise concern about U.S. economy’s health and support gold price.
  • Yesterday (15th June), Cameron Alexander, director at GFMS Precious Metals Demand Asia stated that gold may reach $1,300/ounce from $1,170/ounce before year-end. Political uncertainty in Greece and Eastern Europe may send gold price rocket. Demand from China and India will also push gold higher.

Forecast: In the coming days, gold price is likely to edge up to $1,168.58/ounce, but the trend may only be transitory.

Tonight, U.S. government will public building permits and housing starts. Positive data may show boost dollar and pull gold price down.

Hanh Nguyen