Gold Trade Quiet
Today’s Spotlight Market
Gold futures continue to grind sideways, as the lack of investment demand and geopolitical tension have played pig pong with the market. Global investment demand from exchange traded products has fallen year over year. Total ETP holdings fell to 1,074.5 metric tons in the quarter, from 1,077.2 tons a year earlier, according to the World Gold Council. The geopolitical risks from the Ukrainian crisis have been well noted here and elsewhere. They may continue to underpin the market, providing a layer of support for Gold prices.
Fundamentals
Despite the softer demand from investment products, jewelry demand from Gold has increased, filling the void. Global Gold jewelry demand rose 3 % to 570.7 tons in the first quarter, according to data provided by the World Gold Council. A good chunk of that demand came from China at 203.2 tons. India, on the other hand, saw Gold demand drop by 8.7 % to 145.6 tons. Traders are somewhat optimistic that the Indian Gold demand will improve if and when tariffs are decreased. The US has shown an uptick in inflation, which could bode well for metal prices. The Federal Reserve will likely continue pumping money into the economy via low interest rates, which may stoke inflation.? The problem with the Fed having target inflation is that once it does hit their benchmark, it may be difficult to keep in check.? Tomorrow?s release of the FOMC minutes may give traders a bit more insight into what the FOMC board members focus/concerns are.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the August Gold contract continuing to consolidate in a progressively tightening manner.? This has formed a triangle/wedge pattern on the chart, which has tightened to the point where a breakout is all but imminent. The direction of the potential breakout is unknown, but may move the price of the metal in the range of $50-60.? The 100-day moving average has acted as support in recent weeks, while the 50-day moving average has played the role of resistance.? The oscillators sit at neutral levels, offering no hint as to the direction of the market.?
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