Futures Market News
Gold futures forecast to continue climbing next week
Aug 24, 2012 02:48 PM
The past several sessions have seen the yellowish metal gain as chatter grew about central banks preparing monetary stimulus programs. The precious metal pushed to its highest price in more than four months on Thursday, prompting some investors to cash out and capitalize on those recent gains as bullion drove toward the milestone price of $1,700 per troy ounce.
Gains on Thursday amounted to 2 percent, MarketWatch reports.
But, despite minimal gains during the trading session on Friday, gold was barreling toward the biggest weekly gain since early June.
"Gold has finally moved and looks like it wants to test the $1,700 level sooner than later, but there are no physical buyers at the moment," trading head Afshin Nabavi with MKS Finance of Geneva told the news source. "If we don't see physical interest back in the market, I think this move will be short-lived."
At 1:49 p.m. on Friday, gold futures edged up 0.04 percent, a 60 cent gain to $1,673.40 per troy ounce.
This week's gains
Bullion was driving toward achieving weekly gains of at least 3 percent this week, Reuters reports. The main driver of that lift this week occurred on Wednesday, and leading up to it.
The minutes of the two-day meeting of the U.S. Federal Reserve that convened from July 31 to August 1 were released on Wednesday and anticipation for that release was keen.
Analysts, investors and traders awaited the minutes to determine if or when the body was going to move forward with additional monetary easing as a method of spurring the globe's largest economic system.
The minutes indicated that the body is inclined to commence another asset-purchasing program but only if the economy does not show indications of improving. Though no time frame was cited, the minutes stated that stimulus could occur "fairly soon," according to Reuters.
The yellowish metal is likely to continue rising once that easing program is implemented since the practice draws down the value of the U.S. dollar. Gold consequently rises since the two typically perform the inverse of one another.
Two previous rounds of quantitative easing during the past 48 months have prompted gold futures to soar as the commodity doubled its price during that time period.
Bullish gold bugs
Conjecture about monetary easing has influenced traders to be the most bullish about gold since late last year, according to Bloomberg.
Prices of the precious metal will climb in value next week, 29 of 35 analysts polled by the news source said. Three apiece said gold will drop or remained neutral on the matter.
The proportion of gold bulls touched its highest rate since early November of last year.
'This is gold's moment'
Indications point toward various monetary easing programs in worldwide nations.
China released economic data on Thursday indicating manufacturing has fallen to its weakest rate since November of last year. That is among the most recent data indicating the nation is in need of a boost to reverse six quarters of slackening development.
The sovereign debt crisis continues ravaging in the euro zone, and many believe the European Central Bank is on the precipice of intervening for the sake of Italy and Spain, two key nations that are struggling to stave off the peril that the debt scourge presents.
The U.S. Federal Reserve is set to convene its yearly symposium next week, for which speculation is mounting about an announcement.
"Additional stimulus is inevitable, the question is how it comes," Charles Morris with HSBC Global Asset Management in London told Bloomberg. "There's no doubt about it, this is gold's moment. All the long-term trend signals suggest that gold is in a very strong bull market."
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