Tag Archives: chinese economy

Nov 11

Price of Gold Weekly Recap – November 4-8, 2013

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Monday Open: $1,314.60
Weekly High: $1,323.80
Weekly Low: $1,284.50
Friday Close: $1,288.80

Gold hit some bumps this week to close the trading day on Friday below the $1,300 mark. Monday began largely unchanged as two Fed officials gave strong indication that the bond tapering program would not begin until the economy has undergone significant improvement. (However, Friday’s economic reports caused this sentiment in the marketplace to become doubtful.)

Tuesday’s outside markets were bearish, with a higher dollar and lower crude oil. The low price of crude oil may indicate a hard time ahead for the commodities sector. Also on Tuesday, the ISM non-manufacturing report showed greater strength than expected, fueling some fear that the Fed may consider bond tapering sooner rather than later. China also reported more upbeat economic news, and leaders of the country are in conference about making economic reforms, which the market place will be anticipating in the near future.

The price of gold was bolstered slightly on Wednesday as the dollar sank and crude oil reached higher. The market place also anticipated the European Central Bank’s meeting on Thursday, as there were suspicions that the ECB will soon ease its monetary policy and lower interest rates.

Though analysts widely did not expect the ECB to make a move, they did in fact decide to lower interest rates on Thursday. Gold saw a short high after the news, since the deflationary measure increases the value of gold as a hedge fund against failing economies. However, despite the news from the ECB, the price of gold dropped to a three-week low on Thursday after surprisingly good U.S. economic reports.

Positive U.S. economic reports also racked the gold market place on Friday, continuing a downward trend. The U.S. employment report for October showed unexpected growth, with 204,000 new non-farm jobs, compared with the expected 120,000 increase. Gold responded poorly to this news, closing the week low, with increased anxiety that this news may prod the Fed to begin anti-deflationary measures soon.

Aug 26

Price of Gold Weekly Recap – August 19-23, 2013

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Monday Open: $1,365.60
Weekly High: $1,399.70
Weekly Low: $1,356.90
Friday Close: $1,396.50

This week proved fruitful for gold, as a few economic global events pushed the price range up slightly higher by Friday, despite selling off early in the week. Last week showed improvements for gold, jumping 13%, so after those dramatic gains in an otherwise uncertain trading realm, traders were eager to reap the rewards from the incline and sell off their shares on Monday, bringing the price of gold back down to $1,365.

Tuesday saw gold rise a little bit on some more safe haven demand and a lower dollar. Traders are keeping an eye on the situation in Egypt, as this global crisis could push people back into desiring the hedge fund of gold. Other items of interest this week were the FOMC minutes released on Wednesday and Chinese manufacturing data released on Thursday.

Wednesday’s prices remained near steady as the FOMC released minutes that proved no real surprise to gold traders. With the expectation that the Federal Reserve would be soon employing their “tapering” program to end low interest rates, gold traders are cautious, but the meeting on Wednesday revealed no concrete time frame for when this would happen.

Because of the lack of news from the FOMC, Thursday’s prices remained steady with slight gains. The increase was also influenced by the manufacturing reports released on China’s economy, which had shown improvement. China is the world’s second largest buyer of gold, so a flourishing economy is bullish for the yellow metal.

Friday ended the week on a fairly sharp incline, probably influenced by the subtly bullish factors piling up throughout the week. These gains could spill over into next week.

Jul 15

Price of Gold Weekly Recap – July 8-12, 2013

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Monday Open: $1,235.40
Weekly High: $1,298.00
Weekly Low: $1,233.70
Friday Close: $1,284.40

In light of all the major losses gold has been suffering lately, gold bugs will be happy to know that this week charted gains in the yellow metal’s corner. With a major spike caused by “Fed speak” on Thursday, gold is now reaching up toward the $1,300 mark.

Monday opened positively for gold, prices reacting to a slight slump in the dollar index after the greenback had hit a three-year high last Friday. Conflict in Egypt is still on the world’s radar, and while nothing extreme happened overnight, gold takes its place once again as a safety fund in times of crisis.

Tuesday’s price gains were caused by economic reports out of China that relayed higher inflationary rates in the country. China’s consumer price index for June was up to 2.7%, higher than the 2.1% of May and the forecast of 2.5%. Inflation, or the threat of inflation, brings more attention back to gold as a hedge fund.

The really big day of the week for gold was Thursday – the FOMC had a meeting on Wednesday, which consisted of more deliberation than action, and no conclusive evidence for any changes in Fed policy in the near future, which caused a major price jump on Thursday. One of the major issues of the meeting was how to convey the Fed’s policies to the public. What is now being called “Fed speak” to refer to the statements issued by Chairman Ben Bernanke is a good sign for gold right now. The result of the meeting is that now the Fed expects to employ its “tapering” program later instead of sooner.

Friday reported a few losses in mixed trading, but nothing too substantial to undo the gains from the day before.

Jun 17

Price of Gold Weekly Recap – June 10-14, 2013

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Monday Open: $1,385.10
Weekly High: $1,394.50
Weekly Low: $1,368.10
Friday Close: $1,390.60

The price of gold was characterized this week by fluctuating economic news from various world markets. A few key moves were bullish for gold, while others reinforced the bearish streak to end the week without much drastic movement.

Monday began on bullish anticipation that China’s decision to buy two gold-backed exchange-traded products (ETFs) would push up demand for the yellow metal. China was the second largest consumer of gold in 2012 worldwide, so analysts expect this is a good thing for long-term gold prospects, however, we should not expect a huge rally in the near future. China’s ETF buy, rather, provides some stability for the continuation of gold demand.

Also, Standard & Poors upgraded the U.S. credit ranking to stable from previously negative on Monday morning, which boosted the dollar short-term, but did not have a wide effect on gold. China released some raw economic data that was weaker than expected, a subtle bearish factor for the raw commodities.

The Bank of Japan was the big catalyst for Tuesday’s loss, spurring some trading out of the market overnight. The bank decided not to expand its current quantitative easing program, as some had hoped, which pulled gold prices down. However, Bank Governor Haruhiko Kuroda said they might consider it again if their borrowing costs go up.

Wednesday morning was trading in the same ballpark as Tuesday, but saw some gains by the evening. It was a quieter trading day Wednesday, with the “risk-off” mentality making way for some technical short covering later in the day, as a weaker dollar incurred some buying back into gold.

Thursday was a day of speculation, as Japanese stock markets showed some losses and analysts worried whether this would spill over into U.S. trading. Even though gold generally acts as a safe haven during these situations, this week it was carried more heavily by a risk aversion mentality. Currently, economic turmoil is not tense enough to prompt a large shift back into gold.

Friday urged gold a little north as President Obama issued a statement that the U.S. will provide arms to Syrian rebels. This news encouraged traders to think about the possibility of escalation in an already war torn country, which did move some back into the safe haven of gold, ending the week slightly higher than it began.

The marketplace will be anticipating an address from the FOMC next Wednesday.

Oct 19

Price of Gold Weekly Recap – October 15-19, 2012

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Monday Open: $1,737.30
Weekly High: $1,752.20
Weekly Low: $1,718.00
Friday Close: $1,720.80

Gold opened on a one-month low this week, rallied upwards, then shot back down to close bearishly on a newer one-month low due to global economic pressures. There are a few global factors that contributed to the spikes this week, but as a whole gold is still operating at roughly $200 higher than the $1,500-$1,550 range that dominated most of the first half of 2012.

In a weak global economy, gold acts as a hedge fund and has been on the upswing for the past four years, largely due to economic restructuring of major economic states, not least of which has been the U.S. Federal Reserve’s easy monetary policies. Monday, however, China was on the forefront of traders’ minds, and gold dipped down from the weekend because data revealed that China, whose growth has been slow over the year, though still significantly ahead of the U.S., might not be considering economic restructuring if they can help it. Gold has risen in the past few months in large part due to America and Europe’s monetary loosening, and the same has been expected for China, but September data showed that China’s inflation rate dropped from 2% to 1.9% and their imports grew by 2.4%. This means uncertain trading for gold.

“The bottom line is China’s in this kind of gray area where…things aren’t as good as people want them to be but they’re not bad enough to continue to just throw money at the market,” Matt Zeman of Kingsview Financial said.

Tuesday, gold responded well after the U.S. released positive news on consumer price data, confirming that there is no current threat of significant inflation. If inflation were to appear on the horizon, the Federal Reserve may change their policies to curb price hikes, which would negatively affect gold. Without immediate fear of inflation, the Fed can continue its trend of monetary easing. The dollar also slipped a little compared to other currencies.

However, Wednesday reports on U.S. housing data served to balance out any permanent feeling of comfort regarding the dollar. Housing data was positive, implying that if that trend continues, the Fed may start to slow down their stimulus plans. Spain also received some important news; the struggling country’s credit rating was left unchanged rather than downgraded, and there is still talk of Spain requesting a bailout. Germany also joined the conversation by announcing a lower economic growth rate for 2013 than previously anticipated.

Gold traders anticipated Thursday as results from China’s third-quarter gross domestic product would be released and the European summit would begin. Data from China on Thursday confirmed the foreshadowing from Monday that China may not be as strongly considering economic boosting, since the outlook is good for economic growth.

Friday dropped gold back down below the initial trading point on Monday to a fresh one-month low. The dollar was trading higher on Friday, and the European summit meeting ended, revealing no news from Spain that the country would be asking for a bailout now. Economic uncertainties in all parts of the world contributed to an overall precarious feeling for unconvinced gold traders, causing many to flee the market by the end of the week.

Frank McGhee, precious metals trader of Integrated Brokerage Services LLC, put it this way: “People who rushed in for QE expecting to get a significant lift are getting out of the market.  The longer we don’t make a new high, the more people start getting nervous about where gold is trading.”

This week experienced a 2% drop in gold, the largest weekly decline in four months.

With noncommittal leaders in Spain, a U.S. election on the horizon, a stronger Chinese economy and the season for gold buying in India approaching, yet with a weak rupee, gold seems to be caught once again in a trading limbo. However, once the price of gold breaks $1,800, interest in this precious metal will surely return, as many investors see the yellow metal continuing to perform well in the long-term.

Sep 28

Price of Gold Weekly Recap – September 24-28, 2012

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Monday Open: $1,764.50
Weekly High: $1,782.50
Weekly Low: $1,739.00
Friday Close: $1,774.70

 

Gold stayed in a pretty neutral trading range this week with a slight dip occurring in the middle of the week. Some investors expected gold to break the $1,800 bubble this week, but it didn’t happen; instead, gold experienced some trade offs and a reaction to the European financial dilemma in Spain.

Monday opened slightly lower after investors started taking profits over the weekend in response to news of lower crude oil and grain prices. Tuesday saw gold holding strong despite positive U.S. economic data, most likely because of the breakthrough news a couple of weeks ago that the Federal Reserve would be implementing some new fiscal policies that would inevitably boost inflation, and therefore a safe haven in gold. So, even with slight bursts of good news for the dollar, employment or the housing market, gold has the Federal Reserve’s policies to lean on for growth.

The dip that occurred on Wednesday was a risk-off move by traders responding to protests in Spain and Greece against the countries’ austerity measures, a sign that the European debt crisis is once again on the world economy’s radar. There are some worries that the European Union may back down from some of the policies reached during the summer.

Yet, Thursday took a U-turn upwards when Spain announced a new program of spending cuts and tax increases, indicating they may want to borrow money from neighboring economies. For a long time, speculators have been waiting for Spain to ask for bailout money from the European Central Bank, and some see this is a positive sign. This pushed gold up $26.80.

Additionally, China is not necessarily thriving, and many hope that China will embark on economic measures to boost its economy. The bottom line is that no powerhouse world economy has a strong currency right now, and this is the number one reason why gold is reaching the heights that it is.

“If you put together stimulus on three continents … that’s a good inflationary outlook,” George Gero, of RBC Global Futures, said.

Finally, gold ended the week a little lower due not to external forces, but to a wrapping up of the week and the third trading quarter. Investors took their gains from a lucrative quarter, which experienced a tremendous growth of 11% in the July through September period. This was the yellow metal’s biggest quarterly gain in two years, largely fueled by Fed policies.

Aug 18

Price of Gold Weekly Recap – August 13-17, 2012

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Monday Open: $1,623.60
Weekly High: $1,623.60
Weekly Low: $1,591.10
Friday Close: $1,615.80

This week’s price of gold story unraveled too similarly to the one that’s been told every week this summer; investors are getting anxious at the lack of change in the market, yet are still mildly hopeful for an upcoming change of events. The three major factors that have kept gold in state of limbo for the first half of 2012 have not improved – the U.S. Federal Reserve has not eased monetary policy, the European Central Bank is slow to enact financial safety measures, and China and India have actually decreased their gold demand. This week saw some especially drab news in the world of gold investing, especially in terms of the global economy, but it was tempered by a new billionaire investor and a survey by Kitco that reports that gold bulls are still a majority.

Monday opened above the $1,600 mark, but that was the highest it would be all week. Early in the week, gold fell as bleak economic reports started tumbling in across the major nations. Japan, China, the U.S. and the European Union all reported economic stagnation without any concrete action to bolster paper reserves or otherwise buffer the commodities market. Gold rises as a hedge fund in relation to the dollar, the euro and commodities like oil, so the lack of movement in these realms translates to a lack of movement for gold.

Tuesday took a slight upturn after some fresh, weak U.S. economic data, but it didn’t last long. A slew of negative data started pouring in as the week wore on, including some statistics from the World Gold Council. According to this gold watchdog organization, gold dropped 7% in the second quarter compared to where it was last year at this time, and jewelry demand fell 15%. Alarmingly to gold bulls, 56% of this drop in gold demand occurred in India, which is well-known to be a powerhouse of gold consumption. A weak rupee and sluggish economic growth may have a hand in that. Also, it came to light on Tuesday that six more European nations are now in an official recession. With gold retreating for four quarters in a row, some may be asking: is the gold rush is over?

It’s hard to say, according to most speculators, but it does depend on a few factors, like central bank policy and the economic health of India and China. George Gero, vice president of RBC Global Futures, had this to say: “Unless we start to see some effect of stimulus, traders are concentrating on what is now. If traders can’t find something positive to point to, they tend to shy away from taking risks.”

And nothing drastic has changed in terms of Fed or ECB policy. The next meeting of the Fed is scheduled for August 31, but it’s hard to say whether any significant policy changes will be enacted. Still, this is the next date on the waiting list for gold investors.

Thursday and Friday saw an increase in the market, so that the week closed only about $5 below the week’s beginning.

But it’s still the same waiting game, and as the chief economist of precious metals trading company Degussa Goldhandel GmbH said, “The monetary affairs of the world probably play the most important role for gold prices going forward. The slowing economy will boost calls for easier monetary policy.” Depending on how central governments and banks respond, gold could see a green light ahead. Out of Kitco’s weekly respondents, 16 of 28 still feel optimistic.

In other somewhat positive news, billionaires George Soros and John Paulson increased their gold holdings, driving confidence to some in the market.

Jul 14

Price of Gold Weekly Recap – July 9-13

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Monday Open: $1,581.20
Weekly High: $1,600.10
Weekly Low: $1,556.30
Friday Close: $1,589.40

Gold took a minor upswing followed by an equal downturn this week, followed by another upswing to regain balance, opening around $1,580 to close at just about the same price. This week continued the major pattern of gold this year, with modest (under $50) fluctuations, though no major changes. Many experts believe that gold will hover around the $1,500 mark amidst all the economic changes happening in the U.S. and Europe, and if it does so, it remains a fairly stable investment. Reaching the $1,600 mark is always a slight cause for celebration, and it just touched it again this week.

Gold continues to rise inversely to the dollar, and Monday opened with a strong dollar, pushing gold down. Tuesday marked a volatile day, as morning news reported dollar losses, pushing gold up to exactly $1,600, then dropping back down $40 as updated information became available and the euro actually spiked tremendously. This proved to be the strongest inverse correlation between gold and the dollar in almost two months, since the dollar reached nearly a two-year high.

Still, gold is hovering in the safe range, which falls between $1,550 and $1,630.

Afshin Nabavi, head of MKS Finance, commented on this recent price range for gold. He said on Tuesday, “It looks like $1,630 is pretty much a brick wall, while on the downside, $1,550 is equally strong support. So unless something extraordinary happens, we will be stuck in this range…Everyone wants to get involved in gold, but they have been disappointed several times, so I think we need a confirmation that gold is really going somewhere, and that will only happen when it gets above $1,630, only then will we have some investment come back into the market.”

As for now, gold is trading in a fairly safe, yet limbo, state.

Wednesday and Thursday saw similar hesitations against the dollar, as investors await the Fed’s next move. Recently, the dollar has been performing well and the Fed hasn’t eased up on economic restrictions, keeping gold investors on their toes. More support has lately been headed in the greenback’s direction. China and Hong Kong have experienced some recent slowing of their economy, and investors waited expectantly all week to hear news of China’s refinancing policies.

So, as much as the price of gold dropped inversely to the dollar at the beginning of the week, it gained an equal amount in response to Friday’s news that China’s economic growth has fallen short of expectations. This report came a day after the Fed’s minutes reported no change in policy on Thursday, and gold saw a modest spike as investors took hope in the yellow metal’s recovery against a flailing yen. China reported a sixth consecutive quarter of losses, so Friday ended with a net weekly gain of about $6, as many believe the economic reports might spur the Chinese government into easing monetary rates.