RE:RE:RE:2016 (only three more days for $2,400 U.S. gold)https://www.theweek.co.uk/gold-price/61682/gold-price-enjoys-safe-haven-bounce-but-still-trapped
Jan 5, 2016
For all that, however, the gold price is still trapped in the range between $1,070 and $1,080 that has been its home for most of the past few months. Its failure to break out indicates a general view in the market that there are still fundamental factors that are likely to hold prices lower in the medium term.
These include waning demand for gold jewellery in markets such as China, a still-strong dollar and the potential for the greenback to rise more as interest rates are increased further in the US, which would also be a boon for income generating assets. The next rates' rise could be as soon as March, according to current predictions, which would be the next real test for gold.
But Reuters also notes that so-called "safe haven" rallies in gold "are typically short-lived", as it cites ongoing pressure on the precious metal that is holding it in a tight range near to recent multi-year lows. In particular, there is the prospect of further interest rate rises in the US following an increase in December, which would boost the dollar and could indicate a return to target inflation rates.
Writing in the Daily Telegraph, Peter Spence says that US jobs growth for December is predicted to be confirmed at around 200,000 this Friday, indicating that the labour market continues to go from strength to strength even after the Federal Reserves tightening of the monetary policy for the first time in almost a decade. This could prompt another rise in rates as soon as March.
Should this happen, it would keep pace with the four rises forecast by the Fed for 2016 as a whole and would likely presage the fresh fall in gold that has been widely anticipated by analysts. DailyFX suggests that current volatility may push prices modestly higher in the coming weeks, but that they will slide sharply over the first three months of this year as a whole.
It reckons support could eventually be found around $1,000, but that it could even fall to as low as $975.