HSBC expects Gold rally to continue above $1,100 an ounce

Published: Jan 22, 2016 16:17

Save

Gold may well build upon recent gains above $1,100 an ounce, although there is potential for a near-term pullback first, said HSBC.

UNITED STATES January 22 2016 10:17 AM

NEW YORK (Scrap Register): Gold may well build upon recent gains above $1,100 an ounce, although there is potential for a near-term pullback first, said HSBC.

The bank cited recently sluggish U.S. economic data, with the government on Wednesday reporting the Consumer Price Index dipped 0.1% and housing starts fell 2.5% in December, with this coming after recently soft retail sales.

As a result, market expectations for a Fed rate hike are receding. This is gold-supportive. Also, recent global trends have helped the metal, HSBC continued.

According to HSBC, concerns in China have spread to the U.S., benefitting gold. The financial markets have been rattled this year with dislocation stemming back to December 2015. Since the Fed raised interest rates in December, the oil price has fallen by more than 20%. The S&P 500 stock index is down more than 10%. Most economists’ growth forecasts have been ratcheted lower.

The labor market has been strong, creating 292,000 jobs in December, even though other data has been soft, which in theory suggests weak productivity growth.

“Weak or falling productivity is traditionally gold-friendly. Although prices may pull back near term, we look for the gold rally to continue above $1,100 an ounce,” said analysts at HSBC.

gold prices precious metals prices

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or to learn more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

36 mins ago

Tongling Nonferrous Completes Phase 2 of Mirador Copper Mine; Mining Contract Signing in Progress

The construction and trial operation of the second phase of the Mirador Copper Mine project under Tongling Nonferrous Metals have been completed, and the signing of its Mining Contract is currently being advanced.

36 mins ago

44 mins ago

Sellers Held Prices Firm While Buyers Waited on the Sidelines; After the Contract Rollover, Spot Trades in the Shanghai Spot Copper Market Were Lackluster [SMM Shanghai Spot Copper]

[SMM Shanghai Spot Copper] Intraday trading in the spot market was subdued, while suppliers still showed willingness to hold prices firm. Downstream wait-and-see sentiment remained relatively strong, and spot premiums edged down slightly from yesterday. As the contango price spread between nearby contracts narrowed, suppliers' willingness to ship to delivery warehouses weakened somewhat, putting pressure on spot premiums. On the demand side, downstream buyers maintained just-in-time procurement, and transactions remained sluggish even after suppliers slightly lowered their quotations, as current copper prices had limited appeal to end-users. On the supply side, domestic copper and imported cargoes previously locked in at fixed prices continued to arrive, while social inventory remained at a high level. The outflow of warrants over the next two days may further weigh on spot premiums. Meanwhile, signs that the import window may still open persisted, and expectations for subsequent inflows of ex-China cargoes strengthened, further increasing supply-side pressure. Overall, amid a pattern of weak supply and demand, Shanghai spot copper premiums are expected to remain under pressure tomorrow, with a possibility of a slight widening.

44 mins ago

2 hours ago

Spot Copper Supply in the North China Market was Slightly Tight

[SMM North China Copper Cathode Spot Market] After the contract rollover, downstream buyers picked up goods under long-term contracts. Coupled with the recent improvement in northern demand, spot supply in the market was slightly tight, giving suppliers confidence to hold prices firm.

2 hours ago