Articles


  • Gold has fallen for 3 straight years, but many don’t see a bottom




    Gold futures last month fell to a more than six-year low and tallied a third consecutive year of declines. Many market participants, however, are still reluctant to call a bottom, and even last week’s rally to a two-month high wasn’t enough to convince a majority of analysts that the mid-December low under $1,050 an ounce will hold in the near term.

    Gold futures GCG6, -0.12%  settled at $1,049.60 an ounce on Dec. 17, their lowest since October 2009, in the wake of the U.S. Federal Reserve’s first interest-rate increase in nearly 10 years and prospects for more increases in the new year. Gold finished the year with a 10.5% loss, its third yearly decline in a row.

    But a plunge in global equities and worries about China’s economy to kick off 2016 buoyed gold’s safe-haven appeal, lifting futures to a $1,107.80 settlement on Jan. 7. That was the highest most-active contract settlement since Nov. 3. It’s subsequently pulled back to $1,090.70 as of Friday.

    Now some market watchers see the possibility of prices below $1,000. Others, however, see signs of a turning tide.

    Risk for sub-$1,000 prices
    Chintan Karnani, chief market analyst at Insignia Consultants, said that when considering his outlook for gold this year, he isn’t looking at the upper end of the price range.

    Instead, he’s “more interested in where gold prices will form a long-term bottom.”

    On a demand basis, Karnani expects that to happen by June of this year. That’s also when he believes the U.S. dollar will form a long-term top and start to weaken against its major rivals. It’s also when he expects investors to have a clear picture on the path of U.S. interest rates.

    That means gold can still drop under $1,000 an ounce this year.

    “We have not seen the price of gold confirm the low is in place yet,” said Peter Grant, chief market analyst at precious-metals dealer USAGOLD. “Therefore, fresh lows cannot yet be ruled out either.”

    Lara Magnusen, portfolio strategist and portfolio manager at Altegris, said prices could dip as low as $900, with technical pressure hitting the metal if the market continues to see low imports from China and the U.S. dollar stays strong.

    Altegris has an end-of-the-year target of $1,040 for gold, Magnusen said. That’s barring any major events, though prices “will bounce around given volatile investor sentiment.”

    Prices can rise above that level if there is some real economic growth in China or if the Federal Reserve delays interest-rate hikes, but there are just “too many bearish elements right now: a strong dollar, oil [tapping lows under] $30 a barrel, coupled with low inflation and U.S. fixed income generating more yield than zero on gold,” she said. “You are going to see investors shy away from the metal.”


    Read full article
  • Rabindra Kayastha

    Authorized Person for MEX NEPAL
    Mob: +977 9856030634

  • Pawan Dhakal

    Biratnagar Branch Manager
    Mob: +977 9852033934

  • Our Clearing Member

    Himalayan Commodity Brokers
  • Our Banking Partners

    Laxmi Bank
  • Bank of Kathmandu
  • Nepal Investment Bank Limited
  • Century Commercial Bank Limited