Tuesday, 26 January 2016 11:32

Safest Way To Own Gold is Physical Gold

Gold rallied $12.30 today and trades at $1120.60 per oz., the gold bull camp is winning over with positive momentum on the upside while analysts predict $1160- $1200 per oz in the short term. Historically, gold is in a competitive asset group compared to the stock and bonds market. But in the recent pessimism in the equity market, fund managers doubled their net long position in gold last week. Gold fundamentals did not change while China raised its pace in gold purchases to over 110 tons in December 2015. In the midst of stock market turmoil which spurs the demand of safe haven assets, we believe that gold will gain significant ground in the first quarter of 2016 and anticipate gold to be trading between $1104 - $1130 per oz in the near term.  In the forex market, USD retreated approximately 4% and USDCAD  is trading at 1.4083. Technically, USDCAD reached the peak in momentum and started to show signs of profit taking and mid cycle correction. However, we continue to stay in net long position in USD while monitoring the FOMC’s rate decision. 

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Gold and silver trade at $1101.5 and $14.09 in the Thursday afternoon session while crude oil bounce back to $29.75 per barrel. Gold has been trading around $1100 per oz in the recent week but downward pressure continues to loom because of growing concern in the economic slowdown in China. The country’s central bank reportedly holds 1658 tonnes in 2015, which was a 60% jump from 1054 tonnes since 2009. On the upside, the market is seeking for safe haven assets, such as gold, while stock markets show signs of decline. We still anticipate gold to be traded between $1090-$1109 and silver to be traded between $13.95-$14.25 in the short term.

Watchlist

  • US Fed rate decision
  • China Stock market and currency valuation
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Gold trades at US$1,090 per oz on Friday session as most traders set eyes on collapsing crude oil price and equities. Gold bullion gained slight upward momentum since the beginning of the year as traders seeks safe haven assets. In the market place, fund managers are dovish on crude oil as Iranians are entering the supply stream. Traditionally, Gold price would show the same trend as crude oil dips. But it’s totally different in the past few weeks.

In the foreign exchange market, USD continues to gain positive momentum against most currencies. USDxCAD is trading at 1.454 on the Friday afternoon session. We continue to see large volume demand in US dollar amid all the geopolitical flare ups. We anticipate USD x CAD continues with its uptrend and momentum. 

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Gold bullion trades at $1093.3 on Wednesday afternoon session in New York. Gold is serving its primary purposes as a safe haven asset in the market while crude oil declines to $34.5 per barrel and turmoil in the equity market. Gold is also bullish after FOMC meeting minutes revealed on Wednesday afternoon. Overall, we anticipate the short term gold bullion trend to be traded between $1080-$1103 per oz and silver bullion to be traded between $13.80 -$14.10 per oz.

The Canadian dollar tumbled below 71 cents on Wednesday session and continued its downtrend throughout the day. Market analysts suggest that loonies may sink below 70 cents or 1.4285 (in CAD perspective). CADxUSD is at its lowest since 2003 and most technical chart shows a low possibility of support for the loonies. In general, we may see an extended period of weak CAD in 2016 and anticipate a short term trading range between 1.3980 – 1.4220.

Watchlist

  • Tension between Iran and Saudi Arabia
  • Chinese stock market volatility
  • FOMC rate decision and US non-farm payroll
  • North Korean military movement
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