In last week’s trading session, gold had a relatively gain before the market entered the public holiday. At the close, gold traded at $ 1,075.74/ounce, added 0.56% compared with the opening price $1,069.73/ounce.
On the threshold of New Year holiday, selling psychology covered the market, especially European market and US market.
The focus of this week’s market is the consumer confidence report published by the Conference Board on the last Tuesday of each month, which indicate the consumer spending and is an indicator of the economic activity in December. Economic experts predicted consumer confidence in December will be at 93.9, higher than the figure in November which is at 90.4. Besides, the market also waited for the important economic data this week, including the application for weekly unemployment benefits, producing area reports in the Chicago and pending home sales.
December consumer confidence is estimated to recover amid energy prices as crude oil and natural gas are bottoming many years, and there is still no sign of reversal. December is also the month of many major festivals, including Christmas and New Year holiday, leading the shopping needs to certainly increase. Automobile sales also increased significantly by 1.4%, the highest level in 14 years, reaching 1.32 million vehicles in March 11. Consumer confidence rise will help strengthen procurement needs, making manufacturing and services also improved, raising growth and inflation.
After Christmas, the trading volume is rather low and the dollar liquidity is weak before New Year holidays. The dollar index, a measure of the strength of the dollar versus other major currencies, was stable at 97.96, the lowest since July 16/12. Dollar profit taking incentive before the FOMC interest rate increase of nearly 1 decade has led the currency devalued. The greenback’s weakness helped gold prices strengthen, increasing the appeal of precious metal as an alternative asset.
US Federal Reserve (Fed) is expected to raise interest rates 4 times again in 2016. Authorities believe that inflation could reach 2% target level while prices in the economy will witness the spectacular price rise. However, US economic data released last week failed to meet the expected pace of Fed rate hike. The possibility that Fed cannot raise interest rates further led gold prices to go up.
On physical gold market, investors can be more optimistic on gold’s gains at the end of the year.
According to the News Wall Street and Main Street’s weekly surveys, in 180 people surveyed, there are up to 83 people, or 46% claimed that the price of gold will rise next week. On the other hand, 68 people, or 37% expected price to go down, and 13% neutral. Among the experts participating in the survey, including bullion dealers, investment banks, merchant trading futures contracts and technical analysts, 50% expect prices to go up next week, 21% said prices will decline and 21% were neutral.
On the threshold of New Year holidays, Peter Hug, director of global transactions at Kitco Metals said that the gold price could climb to $1.080/ounce.
Last year rally in gold prices began “rolling”.
In China, the top gold consumer in the world, this year’s Chinese New Year falls on 8/2, considered auspicious day to buy gold in China, the demand for the precious metal often peaked during the first quarter of the year, according to figures from the World Gold Council (WGC). Last year, the country consumed 316.3 tonnes of gold in the first 3 months.
In India, the second largest gold consuming country in the world, demand is also showing signs of recovery from the moment taxes in foreign source increased. The amount of gold imported in November doubles the amount in October. Indian gold demand usually peaks in the last 3 months, as people buy gold as gifts during the festive seasons like Diwali and the wedding season in November. While the global gold price is on the decline, India is likely to increase gold imports by 11% to 1,000 tonnes this year.
Although the amount of gold held in the world’s largest gold trust, SPDR Gold Trust, fell to 7 year lows, reflecting the mentality to leave away from precious metal of the majority of investors while gold prices is looking forward to the 3rd year fell and lost more than 9%, China has increased the buying power by 7.8% in the first 9 months of this year, according to the China Gold Association.
Today, with thin trade volume in the New Year holiday week, gold prices fluctuated in a narrow range.