6 Economic Factors Keeping Commodity Prices Down

This is source I found from another site, main source you can find in last paragraph

By Prathamesh Mallya

The volatility in gold markets continues to spook investors with host of factors ranging from the nuclear prowess of the North Korean peninsula and the words of war exchanged by the two nations, followed by the interest rate hike by the US Federal Reserve, which many in the markets feel will happen as soon as December. The aftermath of the hurricane IRMA and Harvey also added to the momentum in the gold prices.

Revolving around all these factors, international spot gold prices lost its value by around 1 per cent in the past fortnight (Sept18-Oct 12) and traded in a narrow range of $40 (high of $1,320 to low of $1,260) while MCX gold prices rose more than 1 per cent in the same time frame, thanks to the weakening rupee (1.5 per cent depreciation).

Gold prices balanced between geopolitical risk and US rate hike

The US president Donald Trump has already threatened to destroy North Korea and mocked its leader kim Jong Un as a rocket man, besides enforcing national sanctions on the country. The US President also said that any US military option would be "devastating" for Pyongyang, but said the use of force was not Washington's first option to deal with the North's ballistic and nuclear weapons program.

On the economy side, the US expanded a bit faster than previously estimated in the second quarter, recording its quickest rate of growth in more than two years, but the momentum likely slowed in the third quarter due to the impact of Hurricanes Harvey and Irma.

On the other hand, major automakers on Tuesday posted higher US new vehicle sales in September as consumers in hurricane-hit parts of the country replaced flood-damaged cars that began when Hurricane Harvey hit southeast Texas in late August.

Gold has recently come under pressure from rising expectations the Federal Reserve will lift US interest rates once more this year and start trimming its $4.5 trillion balance sheet, much of it built up after the 2008 financial crisis.

Elsewhere, steady monetary policy by Bank of Japan and upbeat view of the economy, signalling its conviction a solid recovery will gradually accelerate inflation towards its 2 per cent goal without additional stimulus.

In the Euro area, the mood among German investors improved more than expected in September as worries about the stronger euro faded, suggesting that markets expect Europe's biggest economy to continue its solid performance in coming months.

Outlook

Markets are pricing in a 76 per cent chance the Fed will raise borrowing costs in December, compared with less than 20 per cent only a month ago. In physical demand, China's net gold imports via main conduit Hong Kong plunged 55 per cent in August from the previous month. Indian gold buyers also remain muted due to higher local prices in turn creating a downside pressure on the yellow metal.

Money managers have been cutting their long speculative positions in gold for past four weeks in a row. Net longs in gold stood at 1,85,788 contracts vis-à-vis net longs of 2,64,934 contracts, clearly indicating that gold prices will remain under pressure in the weeks ahead.

Gold prices will move down lower towards $1,260 from current levels of $1,300 mark, while MCX gold prices will trade lower towards Rs 28,000 mark; (CMP: Rs 29,900 /10 gram).

(Prathamesh Mallya is Chief Analyst, Non-Agri Commodities and Currencies at Angel Broking. Views expressed in this column are his own and do not represent those of ETMarkets.com. Investors should consult their financial advisers before taking any investment calls based on this article)

This is source I found from another site, main source you can find in last paragraph

Source : https://economictimes.indiatimes.com/markets/commodities/views/volatility-keeping-gold-prices-in-check-commodity-may-soon-fall-towards-rs-28000/articleshow/61099494.cms

Minor

commerce

Volatility keeping gold prices in check; commodity may soon fall towards Rs 28,000
China's economy is in a 'Groundhog Day'
Currencies: Commodity Currencies Looking Attractive
6 factors that will affect COE prices now that the vehicle growth rate is going to be 0%
Commodity Prices and Resource Scarcity
Text of Bernanke’s speech on economy
What’s Driving Commodity Prices? (DBC)
Namibia: Domestic Economy to Slow Down
Flaws in India’s economic growth model are becoming clear