Sept. 9 (MF Global) -- Price Outlook
The gold market is expected to maintain a sideways-to-lower direction in the near-term, with prices potentially reaching $1,750 over the next week. Near-term support will come from growth in expectations of new easing measures and/or deficit spending to support the economy and fix unemployment. However, we don’t think monetary policy will do much to fix unemployment and will once again face detractors within the Fed. The President’s speech last night and plans to spend $300B-$400B will be positive for gold, however, it will also face roadblocks in Congress. Pressure on gold could also come from technical factors and the signs of short-covering that have been made in the past week. We lean negative in our bias and expect a fall toward $1,750 over the next week or so. A decline may be anything but a straight line fall, as volatility is likely to remain.