Will Miners? Challenges Drive Gold?
Today’s Spotlight Market
Shares of Anglo-American Plc tumbled to all-time lows after the mining giant indicated that it would suspend dividends to save cash. Anglo-American, which is one of the largest miners in the world, has suffered due to collapsing commodity prices. The company also plans to reduce its workforce to 50,000 employees, down from its current level of 135,000. Anglo-American is not the only miner facing these challenges. Struggling miners could significantly cut investment, which suggests that Gold could see an output decrease in 2016.
Fundamentals
Gold futures have benefited from strong US employment data, which suggests that economic activity is ramping-up.? This could make inflationary pressure a relevant force worth discussing.? Coupled with a possible output decrease, an economic rebound could? put pressure on current supplies.? Junk bonds are heading for their first annual loss since the financial crisis of 2008, suggesting some traders may be becoming more risk averse and could head toward higher ground.? This could make Gold attractive for investors as a flight to quality asset.? Gold may face outside pressure from the currency markets and tumbling Crude Oil prices, which presents downside risk for the metal.
Technical Notes – View Today’s Chart
Turning to the chart, we see the February Gold contract rebounding off support at the 1050 level. However, Gold?s advance was halted by resistance at the 1085 level. Closes above the 1085 and 1100 resistance levels would offer further confirmation of a reversal in Gold prices. The metal is still vulnerable at the 1050 level on the downside.
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